Contrarian Corpus
activist full deck follow up
2015-04-28 · 67 pages

Multiple (portfolio update: AGN, VRX, CP, APD, ZTS, HHC, QSR, PAH, FNMA/FMCC, HLF)

N 3 Narrative
V 3 Visual
C 2 Craft
Original source ↗

The three reasons

  1. 1

    Allergan delivered 89% return as Valeant bid catalyzed auction ending at Actavis $242 vs. $128 cost

  2. 2

    Air Products' EBIT margins can expand 700bps (15.5% to 22.5%) to match Praxair under new CEO Ghasemi

  3. 3

    Herbalife is a pyramid scheme: insider video admits 'inauthenticity'; worldwide volumes turned negative

Primary demands

  • Herbalife: regulatory action against what Pershing Square calls a pyramid scheme
  • Air Products: expand EBIT margins from ~15.5% to ~22.5% under new CEO Seifi Ghasemi to match Praxair
  • Zoetis: board representation and framework for ongoing engagement (Bill Doyle and Paul Bisaro added)
  • Canadian Pacific: continued operational transformation under Hunter Harrison toward sub-60% operating ratio
  • Fannie/Freddie: end the Net Worth Sweep; restore shareholder rights via litigation

KPIs cited

Pershing Square LP cumulative net return since 2004 inception
722.9% vs. S&P 500 134.3% through 3/31/2015
Q1 2015 net return
3.5% vs. S&P 500 0.9%
Total firm AUM
$19.0bn as of 4/1/2015
Allergan share price appreciation
94% (inc. dividends) from Feb-2014 inception; 89% from $128.14 avg cost to $242 close
Valeant TSR since Pearson became CEO (2/1/2008)
4,177% — 42x initial value through 4/22/2015
Canadian Pacific 2014 operating ratio
64.7%, third-best in industry; EPS growth 32%
CP share price appreciation since inception
429% from Sep-2011 13D, 335% from $56.25 avg cost
Air Products current vs. target EBIT margin
15.5% today vs. 22.5% at peer Praxair — 700bps gap, half from SG&A, half from operations
Rockwood TSR under Ghasemi
320% vs. S&P 106% and Chemicals index 193%
APD share price appreciation
66% (inc. dividends) since May-2013 inception to $151 vs. $98.91 avg cost
Zoetis share price appreciation
44% from Jul-2014 inception, 28% from $37.12 avg cost
HHC share price appreciation since GGP spinoff
296% from Nov-2010 to $150 vs. $38 avg cost
Restaurant Brands (QSR/BKW) share price appreciation
176% from 6/19/2012 merger to $39 vs. $14.50 avg cost
Platform Specialty Products share price appreciation
201% from May-2013 LSE IPO to $28 vs. $10 avg cost
Herbalife Q4 2014 worldwide volume growth
(6%) vs. +13% in Q4 2013 — 19pp decline YoY
Herbalife North America / Mexico Q4 2014 volume
(6%) / (6%), swinging from +7% / +5% a year earlier
Herbalife stock decline in 2014
52% from $82 January high amid regulatory probes
PSH discount to NAV
~5% (April 2015); avg 5.7% since listing; widest 11.8% (Dec-2014)

Pattern membership

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

Notable slides (8)

Notes

Periodic LP investor meeting deck, not a single-target activist thesis. Covers 10 positions across the Pershing Square book — nine longs (AGN, VRX, CP, APD, ZTS, HHC, QSR/BKW, PAH, FNMA/FMCC) and one short (HLF). Most position sections follow a templated pattern: divider slide with just a logo, bullet-list thesis page, annotated share-price timeline chart. Rhetorical energy concentrates in the Herbalife section (pages 46-52): direct 'It's a Pyramid Scheme' title slide, quoted insider admission of 'inauthenticity,' volume-growth deterioration chart, and credit-facility leverage chart framed as 'running out of options.' Allergan section is essentially a victory-lap recap (88% premium realized via Actavis deal). Valeant section is initial-thesis for a new position, anchored by the '42x since Pearson became CEO' total-shareholder-return chart. APD section shows a clear peer-gap argument vs. Praxair (15.5% vs 22.5% EBIT margin). Visual production is institutional-template — blue/green/red banner bars, Arial-class sans, many near-empty divider pages — not top-tier editorial design. Campaign_phase set to 'follow_up' as best single label for a multi-position update; individual positions span initial_thesis (VRX) through victory_lap (AGN) and active campaigns (APD, ZTS, HLF).