Bill Ackman, the renowned hedge fund manager, is having a difficult year as his portfolio continues to underperform the broader U.S. stock market, while several of his recently launched investments have also declined. As a result, his net worth has fallen sharply from its peak earlier this year.
Bill Ackman’s Returns are Lagging the Market This Year
Pershing Square data shows that the company’s portfolio has dropped by 9.3% this year. In contrast, the S&P 500 and Nasdaq 100 indices have jumped by 9.6% and 13.4% in this period.
Ackman has also underperformed other hedge funds, with Point72 and Millennium gaining by 14.5% and 10.5% in the year’s first half. Pinpoint Asset Management and Dymon Asia returned 16.9% and 15%, respectively.
Pershing Square has underperformed as some of its portfolio companies have struggled this year. Brookfield Corporation (NYSE:BN), a key part in its portfolio, has dropped by 5.3% since January.
Amazon (NASDAQ:AMZN) has risen by 6.8% as concerns about its massive capital spending continued. Similarly, Microsoft (NASDAQ:MSFT), which Pershing Square invested in recently, has remained under pressure this year.
Other companies in the portfolio like Uber, Hertz, and Restaurant Brands have also underperformed the market. Freddie Mac and Fannie Mae have also not done well.
As a result, key Pershing Square stocks have pulled back. Pershing Square Inc (NYSE:PS) stock has dropped to $34 from the all-time high of $54. PS is the asset management company that makes money by taking a fee from the funds.
Pershing Square USA (NYSE:PSUS), a fund managed by PS, is hovering near its all-time low of $36.75. It has slumped by over 15% from its all-time high. In the UK, Pershing Square Holdings, which is a member of the FTSE 100 Index, has dropped by 25% from its highest point this year.
As a result, Bill Ackman’s net worth has continued falling this year. After peaking at $14.3 billion earlier this year, it has now dropped to $10 billion.
Ackman Has a History of Making Comebacks
On the positive side, Ackman has a long history of making comebacks. He closed Gotham Partners, his first hedge fund in 2003 after making ill-timed bets in real estate, golf, and small-cap companies.
He then started Pershing Square a year later and experienced substantial returns. For example, he made a $3 billion profit investing in Canadian Pacific after installing Hunter Harrison as the CEO. He also made billions in his investment in Chipotle Mexican Grill (NYSE:CMG).
However, he also suffered major losses, including $4 billion in Valeant Pharmaceuticals and $1 billion in Herbalife. He also lost money in Target and JCPenney.
After recording substantial annual declines between 2015 and 2018, he staged a remarkable comeback in 2020, delivering a 70% return for the year. Since then, his fund has generated positive returns in every year except one.
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