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Bill Ackman Needs To Talk To A CFA

Taking personal money from a thriving real estate investment to buy back stock in your own struggling hedge fund is not textbook personal finance.

Hey, not everything Bill Ackman touches turns to shit.


He had that solid little Nike bet a few months back, and Chipotle is on the rebound. Heck, there was even all that upside joy he found in the frozen fish aisle last year. But it turns out that Bill's personal investment portfolio also has a few winners. From Bloomberg:

The hedge fund manager personally holds a majority stake in Rittenhouse Hill, a luxury apartment complex that’s one of the largest in Philadelphia, according to a May regulatory filing that first disclosed his ownership. The property, with about 625 units, has jumped in appraised value since he teamed up with the Pestronk brothers to buy it in 2011.

"Bill Ackman: Real Estate Investor." We like the sound of that. But is he really any good at this or are we looking at another Burger King situation?

Regulatory filings show that he recently took out $9 million of equity through a refinancing of the Philadelphia property that he and the Pestronks originally purchased through a $27 million short sale. They then spent $59 million, primarily financed through borrowings, to gut the twin high rises and transform them into luxury apartments. The building’s most recent appraised value: $178 million.

Well, that's a nice thing to know. Bill's attempt at cutting back, simplifying his life and being a better AckMan seems to be going in fits and starts, so the road to wellness might be long and winding. Our hearts are gladdened to see that Bill has some cash padding to fall back on should the need arise...Wait, what do you mean "there's more" to this story?

Now he’s employing Rittenhouse Hill as part of an effort to revive his $8.1 billion activist hedge fund after three years of losses. Ackman plans to use his personal assets to raise several hundred million dollars to buy shares of Pershing Square Holdings Ltd., the publicly traded version of his New York-based hedge fund, according to a letter to investors. His goal is to narrow the 22 percent gap between the market price and net asset value of the fund’s shares.

Oh, Billy Billy Billy. It's nice that you want to show you still have skin in the game, but be careful that you don't flay yourself, homie. The need to bridge the delta in PSH stock is understandable considering that it's about as wide as the Ganges, babe*, but this seems to be an overt gesture of self-harm that would make investors worry more about your personal decision-making than how narrow the price-to-book suddenly looks on their shares.

You're nothing if not confident and obstinate, Bill Ackman, so we just hope this works out. But maybe also talk to a wealth management advisor and see what they think. Carl Icahn has a guy, we'll get the number.

* [Extreme "When Dennis Miller was funny" voice implied]

Ackman to Put Gains From Luxury Apartments Into Pershing Buyback [Bloomberg]



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