As you know, hedge fund manager Bill Ackman loves himself a good activist investment, particularly if it’s in a place where he can get his lawn mowers, towels, flat screen TVs, and pretzel kegs all for an extremely reasonable price. Unfortunately, while many of his investors support him in this pursuit, some don’t seem to understand how Bill operates. Take Target, for example. The first time he laid eyes on it…I don’t want to say there were tears, but it got emotional. The prices? The layout? That adorable fucking dog? He had to have it- ALL OF IT. Sure, Pershing Square did get involved but it could’ve been faster, bigger, soon. I don’t want to say you blew it for him but…you blew it for him. That’s why Bill’s been thinking and what he’s come up with is that the next time he’s doing one of Sunday morning walkabouts** in a suburban strip mall and stumbles upon his next great love, there can be no hesitation. Which is why Pershing Square proses this.
…raising as much as $3 billion from an initial public offering of a new fund as a way to secure more permanent capital to finance Pershing Square Capital Management’s activist investing. The public offering would be for shares in a new hedge fund that would mirror the firm’s flagship strategy. Ackman is not planning to take the entire firm public, according to people familiar with his thinking. In addition to conversations with investors during the past month, Ackman outlined his desire for obtaining more stable capital in the firm’s May 25 investor letter. A listed fund is one of several options he is said to be considering.
“If we could increase the amount of our capital that is permanent, it would enable us to be more opportunistic during times of market and investor distress, and would also enable us to take larger stakes in a greater number of holdings,” Ackman wrote in the letter…Pershing Square manages about $10 billion, up from $8.6 billion on January 1. In his May investor letter, Ackman notes how much of that sum—about 10% to 15%—must be held in reserve against possible redemption requests. Despite the increase in assets, he is unable to invest as much as he would like given the assets held in reserve.
On a related note? When one is an activist investor, investing in companies in which he deeply believes, one does not have time to hold your hand or have little chats throughout the day. He’ll do it, because that’s just the kind of guy he is, but asking him to do so takes away time that could be spent restocking the shelves of an Egg Harbor Family Dollar, or perhaps just sitting in aisle 5 of a Columbus Target, becoming one with the store.
Ackman also points to the increased demands of managing almost 400 investors’ money. “It is time for my annual reminder to our investors, now nearly 400 strong, that it is increasingly challenging to balance your requests to meet with members of the investment team with the necessity that we focus our efforts on investment research and decision making,” he wrote. “As you can imagine, these requests, often for ‘only 10 minutes’ if accepted, add up to a substantial time commitment.”
Just something to think about.
Ackman Considers $3 Billion Fund IPO [AR]
**At this point, now that he’s become such a celeb in the discount retailer space, he’s forced to roll up to places incognito, a la food critics.