With close to half of the stocks in the hedge fund ending 2024 in negative territory, Bill Ackman’s Pershing Square Holdings posted a net gain of 10.2 percent in a year when the S&P 500 climbed 23 percent, making it the first time since 2017 that Ackman has failed to beat the broader stock market.
Pershing Square owns fewer than a dozen blue-chip stocks, and Ackman said years ago he was giving up shorting except as a macro hedge, making Pershing Square essentially a long-only fund. As a result, its comparison to the overall market is more relevant than for most hedge funds, such as market-neutral, multistrategy, or long-short equity funds.
In 2024, Pershing Square took two new positions: Canadian property company Brookfield, which so far is a winner, and athletic apparel company Nike, which has been a loser.
Nike ended the year down more than 30 percent, the second-worst performer in the Dow Jones Industrial Average. The drop was because of Nike’s poor results in China, along with the company’s ill-fated decision to sell directly to consumers. In a quarterly call to Pershing Square investors in November, Ackman blamed the fall of the stock — down 50 percent from its 2021 peak — on the new CEO, who took the helm in 2020.
Pershing Square bought Nike shares in the spring of 2024 at an average cost of about $90 a share, partner Anthony Massaro disclosed in the call. After releasing poor earnings results, which Massaro admitted the fund did not anticipate, Nike ended the year at about $75 per share. It was one of five stocks Pershing Square owns that ended 2024 in negative territory.
Universal Music Group, Ackman’s biggest position, was also a drag on performance, although its stock only fell less than 1 percent for the year. Other disappointments included Howard Hughes Holdings, which dropped about 5 percent; Canadian Pacific, down about 7 percent; and Restaurant Brands, down 14 percent.
Brookfield was a bright spot in Pershing Square’s book last year, gaining almost 50 percent. Most of the increase came after the fund took a stake in April. Brookfield is in the process of moving its headquarters from Toronto to New York, which Ackman noted will allow its stock to be purchased by passive investors via index funds. “In a world in which index funds own 25 percent plus or minus of almost every business and flows into index funds continue at a rapid pace, I would say you’re kind of missing the boat if you’re not a U.S.-listed company and you’re not eligible for index inclusion,” he said on the third-quarter investor call.
Ackman’s fund is not listed in the U.S., and it has continued to trade at a large discount to net asset value — a perennial problem that the hedge fund manager has tried unsuccessfully to fix. Ackman has long pined for a U.S. stock listing and earlier this year planned an initial public offering of a new closed-end fund, Pershing Square USA. But he was forced to pull the IPO after big institutional investors like Baupost decided against investing in it and others failed to pony up. Ackman initially had expected to raise as much as $25 billion for the fund.
Pershing Square also chalked up gains in Alphabet and Chipotle Mexican Grill in 2024.
Last year, Ackman became better known for his controversial posts on X and his eventual support for Donald Trump’s presidential candidacy than for the investment prowess he has long been identified with. He is hoping that the Trump administration will provide Pershing Square with a windfall by privatizing Fannie Mae and Freddie Mac, the government-sponsored enterprises he has owned since 2013.
The companies were bailed out by the federal government during the financial crisis and put into conservatorship. It now owns 80 percent of the shares. Years ago, unsuccessful attempts to wrest the GSEs from government control led the two giants to be nicknamed “widow makers,” as prominent hedge funds Perry Capital and Paulson & Co. lost a lot of money betting on their privatization.
After Trump was elected president in 2016, hedge funds thought he would finally return the GSEs to private hands. “I think Fannie and Freddie are going to get resolved in the first 12 months of this new administration,” Ackman said at the DealBook conference in November 2016.
But it never happened. In addition, the U.S. Supreme Court sided with the government in a few of the lawsuits over the GSEs.
Last year, Ackman began arguing once again that privatization could occur during a second Trump term, and the stocks rose in anticipation. Fannie shares jumped from about $1 per share in 2023 to more than $3 per share last year, with most of the increase coming after Trump was re-elected.
It’s unclear how much that helped Pershing Square’s returns, as the firm quit reporting the size of its stake several years ago. Ackman initially owned 10 percent of the shares not held by the government, paying $400 million for his holdings in November 2013, when they traded for $2 to $3 per share. It is unknown if he has bought — or sold — more recently. Fannie Mae is now trading close to $4.50 per share, about where it was after Trump was elected in 2016.
On the plus side, Pershing Square also chalked up gains in Alphabet and Chipotle Mexican Grill in 2024.
A spokesman for Ackman declined to comment.
