For Ackman’s Pershing Square, a Record of Big Hits and Misses

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Bill Ackman’s Pershing Square Capital suffered a blow from its bet on

Netflix

shares, but that’s just the latest move in a roller coaster few years for the firm.

On Wednesday, the hedge fund said it sold its 3.1 million Netflix (ticker: NFLX) shares, just months after acquiring the stake in January. Pershing Square took a loss of more than $400 million on the sale, a person familiar with the situation said.

The exit came after Netflix disclosed late Tuesday that it lost subscribers for the first time in more than 10 years. On Thursday, Netflix shares were down nearly 3% in afternoon trading.

Ackman’s Pershing Square is known for placing bets on a small number of companies. The New York firm gained much attention as activist investor, waging battles to make changes at the companies in which it invested. The firm has retired from activist short selling.

One of Ackman’s biggest successes came in 2020 when Pershing Square turned a $27 million investment on a hedge against coronavirus volatility into a $2.6 billion gain. William Cohan, the former investment banker, called Ackman’s move perhaps “the single best trade of all time” in an op-ed for the

New York Times
.
 The hedge fund has posted strong returns over the past three years, including a 70.2% gain in 2020.

Ackman has had other wins, including buying a 14.2% stake in

Canadian Pacific Railway

(CP) in 2011. After winning a proxy battle with CPR’s board, Pershing put in a new CEO and revamped the company’s strategy. In 2016, Pershing sold its stake, making $2.6 billion in profit.

Last year, Ackman’s Pershing Square again invested in Canadian Pacific, buying 2.8 million shares. About 8% of Pershing’s portfolio was invested in the railroad, according to a Pershing 2021 annual report.  

In 2021, Ackman’s fortunes weren’t as rosy. His high-profile special purpose acquisition company,

Pershing Square Tontine

(PSTH), worked for nine months to complete a business combination with

Universal Music Group
.
It planned to spend $4 billion to buy 10% of UMG but ended up calling off the deal, citing regulatory issues.

Instead, other Pershing Square funds, including a co-investment pool, ended up spending $4 billion to buy 10% of Universal Music Group. UMG is Pershing’s largest position.

“It is one of the highest quality businesses we own and it trades at one of the largest discounts to intrinsic value in our portfolio,” the 2021 annual report said. UMG has nominated Ackman to join its board as a nonindependent director, according to a statement. Shares of Universal Music have rebounded since hitting a year-to-date low of 17.99 euros in March and are currently trading at 24.12 euros.

Ackman isn’t a stranger to mistakes. In a 2016 annual letter to investors, he apologized for Pershing’s investment in Canadian pharmaceutical firm Valeant, which resulted in a $4 billion loss. Valeant, now called

Bausch Health Cos

(BHC), is currently spinning off two companies. 

Then, there is

Herbalife Nutrition

(HLF). In 2018, Ackman ended a five year battle with the nutritional food supplement company — he famously called it a pyramid scheme—when Pershing sold its stake. Ackman lost $1 billion shorting the stock.

Write to Luisa Beltran at [email protected]