By Svea Herbst-Bayliss and Katya Wachtel
NEW YORK Aug 5 It was a tough July for hedge fund manager William Ackman, whose $11.16 billion Pershing Square Capital Management lost 2.2 percent during the month, according to three investors.
The fund got hit hard by its short position in nutritional supplements company Herbalife Ltd, which saw its share price rise more than 40 percent last month. Ackman's fund has invested $1 billion on a bearish bet that Herbalife will be unmasked by regulators as a pyramid scheme.
A long position in retailer J.C. Penney Co Inc also hurt the fund as the stock slid about 17 percent in July.
Pershing Square remains up 3.8 percent year to date, according to the investors. The sources did not want to be named because they were not authorized to speak publicly about the private fund's returns.
A representative of the hedge fund declined to comment.
Hedge fund returns rose about 1 percent last month according to early estimates by Bank of America Merrill Lynch, while the S&P 500 stock index climbed 4.95 percent. For the year, funds have risen roughly 3.6 percent on average, according to that Bank of America data, while the S&P 500 was up 18.2 percent through July.
Pershing Square had gained 2.2 percent in the first two weeks of July, sending yearly gains to about 8 percent through July 15, Reuters previously reported. Despite the disappointing bets on Herbalife and J.C Penney, some of Ackman's other big holdings, such Procter & Gamble and Canadian Pacific, have performed well this year.
But losses in Ackman's New York-based hedge fund mounted during the second half of July. The hedge fund reported to investors its assets under management fell to $11.16 billion through the end of July, down from about $12 billion in June.
As of July 30 Pershing Square had incurred at least $300 million in losses on its Herbalife trade, Reuters previously reported.
On July 31 Herbalife shares soared even higher after media reports revealed billionaire investor George Soros had taken a large long position in the company, sending the stock to its highest price since May 2012.
On the same day, Ackman unveiled his biggest bet ever with a $2.2 billion investment on Air Products & Chemicals Inc. Ackman said in a filing that he believes the company to be "undervalued" and an "attractive investment."
According to a July note sent to Ackman's investors, Pershing Square's portfolio is composed of 10 long positions and one short position. The note doesn't mention Herbalife by name.