Early yesterday morning, the big news of the day was that Pershing Square Capital Management, the $12 billion hedge fund managed by Bill Ackman, snapped up a $2.2 billion, or 9.8%, stake in Air Products.
The stock rose about 4% in the pre-market on the news that the well-known activist investor had amassed a long position.
People have been wondering for a couple of weeks now which “simple, predictable, and free-cash-flow -generative” company Ackman’s new single-stock investment vehicle was going to pick.
But before noon, his thunder was completely stolen.
The nutrition product seller’s stock surged on the news. It was the talk of the Street.
Herbalife, a multi-level marketing firm that sells nutrition products, is the stock that Ackman is famously short and has called a “pyramid scheme.” Back in December, he publicly declared that he was shorting more than 20 million shares of the stock and has a price target of $0. In other words, he believes the company will be shut down.
Since then, Herbalife’s stock has been at the centre of an epic clash of hedge fund titans full of drama.
Ackman’s big rival billionaire investor Carl Icahn purchased a massive stake in the company and said that he thinks Ackman will be the victim of the “mother of all short squeezes.”
Icahn told Bloomberg TV’s Trish Regan that afternoon that he didn’t know if Soros was a shareholder or not.
“It would be great if someone of George Soros’ credibility would be a large stockholder,” Icahn told Bloomberg TV’s Regan.
According to Fox Business Senior correspondent Charlie Gasparino, Ackman’s lawyers are pressing the SEC to look at possible market manipulation around Soros’ Herbalife investment.
And just when it seemed like things couldn’t get any worse for Ackman, JCPenney’s shares collapsed in late trading after the New York Post’s James Covert published an article about CIT clamping down on credit for the retailer. (The retailer’s stock was up in the pre-market today. CIT Group is not bailing on the company, according to CNBC.)
Ackman’s Pershing Square owns a 17.74% stake in JCPenney, according to the latest 13F regulatory filing for the fund.
Here’s a report card of how these holdings did yesterday:
- Air Products (long 20,545,284 shares): The stock rose $3.03, or 2.87%, to end at $108.64 a share. That’s a gain of $62,252,210.52.
- Herbalife (short ~20 million shares): The stock rose $5.46, or 9.09%, to end at $65.50 a share. That would be a loss of $109,200,000 on his short bet.
- JCPenney (long 39,075,771 shares): The stock fell $1.66, or 10.21%, to close at $14.60 a share. That would be a loss of $64,865,779.86.
So between these three stocks, Bill Ackman lost $111,812,569.34 yesterday.