Anyone want to take a guess at what the two new investments are?
“Large US based multinationals”…are what Ackman says they bought, one of which has had rapid price appreciation.
Pershing- Square- Q2- Letter –
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9 replies on “Pershing Q1 Letter”
GE, ATT
I cant read the doc.
The stupid thing with Ackman (and Einhorn) is that they're basically traders, and only part value investors. Ackman had owned huge stakes in Visa, Mastercard, Dr. Pepper Snapple, Wendy's/Arby's, but then sold them off after only a quarter or two.
Not really Ben.
he held those stakes for a while and I believe the Dr. Pepper was an arb…
unlike buffett he does not have billions in insurance float coming in every quarter. if he sees a better opps, something has to be sold to buy it… just like most of us…
everything he does is with a value bent either long or short.
you can't pigeon-hole value investing into a neat little box. for myself, i like Vitaly's style in "Active Value Investing"
No, go back and look. Ackman did not hold them for a while. He held them for a couple of quarters at most. He held Mastercard for one quarter. Visa for basically two quarters.
Dr. Pepper was a spin-off from Cadbury, engineered by Nelson Peltz (Ackman's hero), not an arbitrage. In fact, I believe Ackman sold at a loss. David Einhorn is an even more aggressive trader.
To me, "active value investing" comes as an oxymoron. But hey, what do I know.
I've skimmed though "Active Value Investing," and Vitaly doesn't advocate frequent trading. He called it "active" to position his strategy against buying and holding an index fund, which he says is like running on a treadmill in a market plagued by P/E compression – like today's is.
I can't remember the details of his three-pronged model, but I remember it being a kind of GARP strategy. The formulas he came up with (which I don't remember) were for pinning down reasonably-priced stocks. I don't recall him ever endorsing a high-turnover approach.
As far as selling because there's something else to buy, I found [through an mock fund, thank goodness] that doing so just makes the turnover go crazy. I found out the hard way – thankfully, with only imaginary dollars – that doing so also whittles away at diversification and leaves the portfolio more exposed to value traps. Give my own short experience, I have to say that a high turnover is good evidence of being swayed by illusion-of-control bias.
Unless the investor's an arb, but that's a different matter.
Trading definitely works: just look at George Soros or Steven A. Cohen or whoever.
Of course, there is one caveat: all these guys, including Bill Ackman, trade on inside information. For instance, I am shocked that Ackman wasn't investigated by the SEC for his Long's Drug Stores trade. The markets are collapsing and so is Ackman's portfolio, and he needs a quick $500 million and — poof! — there it is! Of course, the SEC didn't investigate Madoff either.
But yes, I think what you've written is exactly correct, particularly what you said about illusion-of-control bias.
Thanks for the reply, Ben. There are successful professional traders, but they're a different breed entirely.
Am I missing something or is this letter, dated June, actually for Q1, not Q2?
yeah,
error on my part…i corrected it