BOSTON Feb 28 Noted stock picker William Ackman
had a decidedly gloomy day on Thursday: Two of his most
high-profile bets were moving fast, but in the wrong direction
for the hedge fund manager and investors in his $12 billion
Pershing Square Capital Management.
The day started with news that the shares of retailer J.C
Penney Co Inc, in which Pershing Square is the largest
investor, tumbled as much as 22 percent in the wake of
disappointing earnings news. The shares closed down about 17
percent at $17.57.
The second blow came hours later when Herbalife Ltd
- in which Ackman made a $1 billion bet its shares would fall to
zero - invited two representatives of arch enemy Carl Icahn onto
its board. The company's shares ended the day 7.6 percent higher
at $40.29 after the announcement.
The one-two punch of bad news is particularly punishing for
Ackman because Pershing Square manages a very concentrated
portfolio with only a handful of stocks, far less than the
average hedge fund.
To be sure, Ackman has other strong performers in his
portfolio, including mall operator General Growth Properties Inc
and Canadian Pacific Railway Ltd. But Herbalife
and JCP are the names Ackman spends most of his time explaining
and defending at public conferences and behind closed doors to
his own investors.
Coming at the month's end, the surging and swooning surely
took a bite out of his fund's performance just as competitors
were tallying their final numbers. Like his rivals, Ackman
started 2013 on a strong note with a roughly 4 percent gain in
January topped off by a roughly 0.9 percent rise in February,
people familiar with his numbers said.
Clearly, the day's developments were not something the
usually chatty Ackman was ready to discuss - at least in public.
Telephone calls and emails, which the manager often returns
immediately, went ignored as a day one associate described as
"crazy" dragged on.
So far, Ackman's own investors have shown no signs of
abandoning the fund manager, even as some have expressed concern
in private that he has been so public about Herbalife.
However, the day's price moves are bound to rankle the ultra
competitive manager just as he is trying to raise new capital.