Another record year for Pershing Square

The billionaire investor (pic) said Pershing Square had a net return of 4.6% in December, bringing his overall returns for the year to 70.2% and surpassing 2019’s previous record of about 58%.

NEW YORK: Bill Ackman’s Pershing Square Capital Management reported its second-consecutive record performance in 2020 by returning more than 70% on its investments.

The billionaire investor said Pershing Square had a net return of 4.6% in December, bringing his overall returns for the year to 70.2% and surpassing 2019’s previous record of about 58%.

The results eclipsed the gains of the S&P 500, which rose 16% in 2020.

Back-to-back wins mark an impressive return for Ackman, whose hedge fund previously racked up three-straight years of losses after a disastrous bet on Valeant Pharmaceuticals Ltd. and an ill-fated short-selling campaign at Herbalife Nutrition Ltd, among other challenges.

Pershing Square’s 2020 returns were buoyed by a lucrative credit hedge Ackman put in place in the lead-up to the coronavirus pandemic and the subsequent market sell-off.

Ackman said in April that he had been so concerned about the potential impact of the coronavirus that he had considered liquidating Pershing Square’s entire portfolio before instead opting for a credit-hedge strategy.

The bet paid off and returned about US$2.6bil to Pershing Square by the time it was sold in March, or roughly 100 times the size of the original investment.

Ackman used the proceeds to make what he called a “recovery bet” on the economy, increasing stakes in portfolio companies and reinvesting in others including Starbucks Corp.

Ackman’s attention later turned to his blank-check company, Pershing Square Tontine Holdings Ltd.

In July, the special purpose acquisition company, or SPAC, raised US$4bil in an initial public offering, plus a US$1bil commitment from Pershing Square, and is now seeking a private company to take public. Ackman had held talks with Airbnb Inc, Stripe Inc and others. — Bloomberg