(Adds details on fund, performance, background on Herbalife)
By Svea Herbst-Bayliss
BOSTON May 1 Activist investor William Ackman's
Pershing Square Capital Management roared ahead in April with
the help of a proposed acquisition, leaving his flagship fund up
roughly 19 percent for the year, three sources said on Thursday.
The $13.6 billion hedge fund's Pershing Square Holdings fund
gained 7.6 percent last month and is now up 20 percent while his
flagship Pershing Square LP fund is up 18.7 percent for the
year, net of fees.
The gains cement a dramatic comeback for one of Wall
Street's most closely watched investors after some bruising
losses during the middle of 2013 when the fund ended the year up
This year, thanks to gains throughout his concentrated
portfolio, Ackman is sitting on one of the industry's best
records, handily beating the Standard & Poor's 500 Index which
is up less than 2 percent and many rival hedge funds that have
been pummeled by the stock market's erratic moves.
Many fund managers are still compiling their monthly
A large part of April's gains were driven by pharmaceutical
company Allergan Inc, whose stock rallied 36 percent in
the wake of news that Pershing Square had acquired a 10 percent
stake and is working with pharmaceutical company Valeant
to buy the Botox-maker.
Pershing Square also won big when Japan's Suntory Holdings
purchased Beam Inc, creating the world's
third-largest premium spirits company. The deal closed this
Even his $1 billion short bet against Herbalife Ltd,
the nutrition company Ackman has called a pyramid scheme, is
working out this year as its stock price has fallen 24 percent.
Last year it roared higher when rival fund managers including
Carl Icahn and George Soros lined up against Ackman.
Herbalife has steadfastly denied that it pays members more
for recruiting new members than for selling its products to
The U.S. Securities and Exchange Commission, Federal Trade
Commission and several states attorneys generals are probing the
company and the FBI is pursuing a criminal investigation.
Icahn and Ackman, two of Wall Street's best known activist
investors who push for change at companies, forged a truce last
week after a telephone conversation and agreed to disagree over
Herbalife, a person familiar with the discussion said.
Last week Ackman gained new attention when he announced that
he was working together with Valeant to try and take over
Allergan, creating what other fund managers have called a
potential new model for activist investors who often have to
wait for a catalyst to help push the share price higher.
While Pershing Square, which counts state pension funds in
New Jersey, New Mexico and Massachusetts, among its clients is
sitting on strong gains now, investors that the fund's very
concentrated portfolio of roughly a dozen stocks can experience
big gains, or losses.
This year, Ackman has sidestepped a lot of the wreckage that
has hurt other fund managers whose big bets on technology
companies, for example, have not worked out in the first months
of the year.
(Reporting by Svea Herbst-Bayliss; Editing by Lisa Shumaker)