Contrarian Corpus
activist full deck follow up
2015-01-29 · 81 pages

Multiple (PSH portfolio: AGN, HLF short, APD, CP, QSR/BKW, PAH, ZTS, HHC, FNMA/FMCC)

N 3 Narrative
V 3 Visual
C 3 Craft
Original source ↗

The three reasons

  1. 1

    Concentrated activist strategy delivered 40.4% net returns in 2014 vs. 13.7% for S&P 500

  2. 2

    Allergan/Valeant campaign drove +19.1% PSH return; Allergan sold to Actavis at 75% premium to entry

  3. 3

    PSH IPO ($2.8bn raise) creates permanent capital, lifting permanent share to 36% of AUM

Primary demands

  • Continue Valeant/Allergan merger pressure; replace Allergan board for refusing to engage
  • Sustain Air Products operational transformation under new CEO Seifi Ghasemi to lift EBIT margins toward Praxair's 22%
  • Maintain Herbalife short pending FTC/DoJ/state AG actions and business deterioration
  • Reverse Treasury net-worth sweep of Fannie Mae/Freddie Mac via litigation

KPIs cited

2014 net return (Pershing Square Holdings)
40.4% vs. S&P 500 of 13.7%
Cumulative net return since inception (Jan 2004)
Pershing Square L.P. 696.2% vs. S&P 500 132.1%
Average return in down months
(0.8%) vs. S&P 500 (3.6%) — downside protection
Total firm AUM
$18.3bn at 12/31/2014
Permanent capital share of AUM
36.2% (46% incl. GP/affiliates) post-PSH IPO
Allergan attribution to PSH
+19.1% gross contribution in 2014
Allergan share price move
$125 entry → $224, +71% incl. dividends through YE2014
Herbalife share price decline in 2014
(52%) from January peak; (41%) since 5/1/2012 short inception
Herbalife worldwide volume points growth
13% in Q3'13 → 0% in Q3'14; (12%) deterioration
Air Products EBIT margin gap vs. Praxair
16% (APD) vs. 22% (PRAX); target 22.5%, ~650bps to close
Canadian Pacific operating ratio
64.7% in 2014 (third-best in industry); guidance 62% for 2015
CP share price since 9/22/2011 inception
+384% incl. dividends
Restaurant Brands (BKW) share price 2014
+72% incl. dividends; +175% since Justice Holdings merger
GGP total shareholder return (incl. HHC, Rouse)
$0.35 → ~$35 from Nov 2008 to Feb 2014 exit (>100x)

Pattern membership

Where this document fits across the library's 12 rhetorical / structural patterns.

Notable slides (8)

Notes

Fund-level LP annual update — recap of full PSH portfolio rather than a single-target activist pitch. Filename prefix '2014-02' refers to the 2014 fiscal year/annual context, but the cover date is January 29, 2015. Document blends multiple postures: victory-lap for Allergan/CP/Beam/GGP; ongoing activist defense narrative for Herbalife short (with verbatim insider quotes about 'inauthenticity'/'deception'); operational thesis update for APD (Praxair margin-gap framing); structural pitch for the new permanent-capital vehicle (PSH IPO). Visual style is the standard Pershing Square template (blue/green color-banded headers, bullet lists, annotated price-history charts) — functional and on-brand but not editorial/data-viz tier. Most quantitative claim density is in HLF and APD sections.