Remember about a year ago when Bill Ackman shed tears at Target’s annual shareholder meeting after losing one of the most expensive proxy fights in history against the big box retailer?
At the time, Pershing Square IV, the Target-focused fund Ackman collected $2 billion for, had lost almost 90 percent of its value. The losses prompted Ackman to “apologize profusely” to investors in the fund and declare the losses “one of the greatest disappointments of my career to date.” Pershing also restructured PSIV, cutting fees and letting some investors out early.
Fast forward a year and PSIV is now up 175 percent since the restructuring, according to an investor in the fund (although it’s still down since its inception in the summer of 2007.) Ackman has also scored big on the mall owner General Growth Properties, chalking up absurd returns of over 20 time his original investment despite criticism of his position from other hedge fund managers.
With Target’s annual shareholder meeting about a month away, we’re wondering whether a newly-emboldened Ackman will revive his boardroom brawl. Pershing isn’t saying either way but we know Target is gearing up for another fight just in case.
Pershing Square still owned 21 million shares or 2.8 percent of the company at the end of 2009, according to its latest SEC filing. In Ackman’s third-quarter investor letter, he pledged to hold the position in Target, which he still believed was undervalued. Still, at the time he issued the letter, Target shares were trading $10 less than where they are now.
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u understand that when you are down 90% and then make 175% from there u are still down a smooth 72.5% of your original invesmtment, right?
Hey Zach 8==)~~
@2 That’s just some math nonsense. 175% = bottles and models!
2 = Zach’s Manhattan GMAT teacher
@2 NO, you are UP 85%.
We’ve been through this before. Please try to pay attention.
- another former Lehman quant
good post.
-WA
@6
You take the numbers from the article and use the magic of continuous compounding to make it rain. Standard procedure.
I know Will Ackman. I’m friends with Will Ackman. Zach, you’re no Will Ackman.
[Talking about the returns]
Ackman: They’re *in* the computer?
@6/8:
Absolutely correct. These P-SIVs utilize proprietary trading strategies to achieve real rates of return far ABOVE the stated average percentage gains and losses, which are after all just numbers. Ackman’s funds could lose 100% and still come back strong in subsequent years. No investor should be fazed by temporary, short-term swings in performance.
- CFA certificate holder
This wasn’t terrible. Hang in there Kouwe.
thats soooo cute you guys
Zackie remembered something from his content-scraping days at DealBook and incorporated it into a Dealbreaker story.
I’m sending him home with an A+ and a gold star today!
And pinching his cheek, affectionately.
@2, i’d say that’s 82.5%
@14, i pray you’re joking – if not it’s spelt
f-a-s-h-i-o-n-i-s-t-a-.-c-o-m
@13 – I want to pinch him, too.
@15 – multiple choice (new CFA format)
6/14:
a) worked for Lehman as a quant
b) is being sarcastic
c) not funny
@17/VS haha! all evidence points to 14 being an ‘a’, while 6 mocking type ‘a’ ends up as a mashup of types ‘b’ and ‘c’.
Zach if you want to have a modicum of insight, how about doing some actual work instead of pointing out what yahoo finance can tell us, namely Pershing owns Target and Target has it’s annual meeting soon. How about looking through the points Bill was trying to accomplish through the proxy fight and see what, if anything, has been achieved?
@19 you’re right – Ackman’s been floating Zach his investor letters since his days at the NY Post – Zach somethimes gets it before Bess or Bloomberg and rewrites the investor letter with an all hail to Ackman. He’s basically Ackman’s ‘access reporter’. Which means we don’t know what important facts he’s leaving out of the story in an effort to spin a good hedge funder story for his source.
Shut the fuck up, Kouwe
82.5% imho
“u understand that when you are down 90% and then make 175% from there u are still down a smooth 72.5% of your original invesmtment, right?”
A step at a time, mates.
Down 90% leaves you at 10. 175% of 10 is … 17.5. You’d then have to add the 17.5 to the original 10 to get … 27.5%.
100 – 27.5 = 72.5.
So #2 was right, and his detractors seem to be confused about what the expression “up 175%” means.
@23 – I just had an up 175% overnight but it did not seem enough to my sugar mama, damn it. It’s hard when your base is all but 4 inches…
@23 good effort but you obviously do not understand financial accounting.
-6
“you obviously do not understand financial accounting.”
A fact that keeps me out of McMansions and out of prisons too.