Communiqués

Bill Ackman: Where We’re Going, We Don’t Need Roads

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The principal weakness we share with most other money managers is the fact that our capital base is not permanent, and we therefore keep cash on hand and/or own passive liquid investments which we can sell to meet potential investor demands for capital. To address this weakness in our open end hedge fund structure, later this year, we intend to launch the private phase of Pershing Square Holdings, Ltd., which we expect to eventually list on the London Stock Exchange…In [the cases of Canadian Pacific, JC Penney, Justice Holdings and General Growth], we had the resources to effectuate the necessary change and the capital commitment from investors who were willing to wait for the changes to be implemented. During the course of each investment, however, there have been periods of enormous skepticism both from the investing public at large and, presumably, from some of you who are invested in the Funds…The Pershing Square funds have been a large beneficiary of our ability to take advantage of periodic market skepticism by increasing our ownership at more favorable prices. Volatility is the friend of the unleveraged long-term investor. We much prefer the bumpy road to higher rates of return than a smoother ride to more modest profits. Read more »

T2 Partners: There’s A Good Chance We’re Not Actually As Dumb As We Look

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We struggle with how bad of a grade to give ourselves for 2011 because in some ways it’s too early to tell. Yes, many of our stocks took beatings during the year, but only time will tell whether we were wrong or just early. We think in most cases the latter, given that we still own meaningful positions in 8 of our 10 (and 15 of our 20) biggest losers on the longside in 2011. If even a handful of these stocks perform like we think they will in the next 1-3 years, we won’t look as dumb as we do today– and thus we might give ourselves a C for 2011. If these stocks don’t recover then we deserve a D. Why not an F? Because an F is reserved for blowing up- and we didn’t…We feel badly about our recent performance and obviously wish we’d done many things differently, but we are not at all discouraged, as we’ve been through this before. If you look at our performance table at the beginning of this letter, you will see that we’ve lost more money, much faster, on two other occasions: we were down 27.4% in eight months from June 2002 – January 2003, and down 32.8% in five months from October 2008 – February 2009. In both of these cases, by playing a strong hand and buying more of our favorite stocks as they plunged, we made back all of the losses (and then some) remarkably quickly: in only nine months in 2002-03 and a mere seven months in 2008-09. We could not be more confident that we will rebound strongly from our latest losses [-24.9 percent for 2011] as well. Read more »

Bill Gross: Run For Your Lives

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As astute followers of PIMCO chief Bill Gross know, the bond manager often uses metaphors to explain various market behavior in his monthly Investment Outlook letter. In the past, he’s told us about why US policy makers are basically praying mantises in that they’ll bite your head off after sex, why this country is a patient waiting for a heart transplant, and why Congress reminds him a lot of Pepé Le Pew. Gross has also taken the opportunity to sprinkle in little personal details, including his pajama preference, his hatred for automatic flushers, a story about the time he acted like a cheap prick to a waitress (“A Gross family legend!”), and, of course, his inability to love the body god gave him. Most recently, Bill used the space to warn people that 2012 will be the year the markets will make you feel like lost your fucking mind. Read more »

John Paulson Is Sorry

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Hedge fund legend John Paulson apologized to investors for what he is calling a year that has been “the worst in the firm’s 17 year history.” “We are disappointed and apologize,” the Paulson Funds said in a letter to investors obtained by CNBC. Hedge fund legend John Paulson apologized to investors for what he is calling a year that has been “the worst in the firm’s 17 year history.” “For 17 years, we have been generally correct in these macro assessments. This year we were clearly wrong in our judgment regarding the potential for the negative conditions mentioned above to create a toxic mix of fear in the markets,” the report says. The hedge fund company is now “wholly focused” on returning investors to their high-water marks. The report says Paulson is confident that “many of our position will recover as fear subsides.” [NetNet]

Dear Pershing Square Investors: We’re All In This Together

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Sure, Bill could let himself get upset about how things are panning out this year but he’s not. And if anyone should be freaking out about the way things are going, you’d better believe it’s him. He’s got mucho personal dinero tied up in this thing and if it goes down big time, it’s gonna be good-bye weekly Target shopping sprees, hello can I fill out a job JCPenney job application. And yet here he is, no freak outs, no panicking, no how am I going to get myself out of this. Everything is fine, there is nothing to worry about. If you were invested with a manager like, for instance, John Paulson, then you could worry. Then it’d be totally understandable to consider yourself fucked- big time. Luckily for you, though, you’re with Pershing and at Pershing, we focus on the big picture. Rome wasn’t built in a day and places like Family Dollar aren’t going to become premier shopping destinations without a little patience. So: Do. Not. Worry. About. Your. Money. All is good. Take a deep breath, calm down, and dry those eyes. We’re all in this together and if Bill’s not crying, you shouldn’t be either. Read more »

David Einhorn Is Flattered By The Gesture But You’re Going To Have To Do A Lot Better Than That

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In related news, cat got your tongue? Read more »

Third Point Up For The Month, Waiting Patiently To Pounce

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Read more »

Bill Gross Would Have Beaten His Benchmark Had He Not Eaten Those 500 Basis Points

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Several weeks back, bond manager Bill Gross wrote a very personal letter to investors about feeling fat. In it, he spoke of hating his “spare tire,” feeling self-conscious about wearing a bathing suit, and preferring to be shot dead than getting a glimpse of what his ass has become. Today, Bill sent out another letter, entitled “Mea Culpa,” in which he apologized to PIMCO investors for the poor performance of the firm’s Total Return Fund (which through Wednesday was up a mere 1.1 percent versus the 5.7 percent benchmark). And yet perhaps it is the investors who should be apologizing to Mr. Bill? Read more »

Dick Bové Looks Forward To Saying “Told Ya So” On The Debt Downgrade

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“The government has spent years convincing the electorate that anyone associated with the financial system in the United States is fundamentally dishonest. Therefore, any comments from financial leaders concerning what the impacts of a downgrade might be are simply not believed. Thus, it is becoming increasingly possible the politicians want to see for themselves what will happen.” Read more »

Dan Loeb: Down On Hope, Up For For The Year

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The Down:

The up: Read more »

Dennis Gartman Just Wants To Point Out That He Sooooo Called This Earthquake

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When discussing the horrible tragedy this afternoon, please, remember to give Gartman credit. Here’s what he wrote in a note today: Read more »