Contrarian Corpus
activist full deck follow up
2017-04-24 · 86 pages

Pershing Square Portfolio (multiple positions)

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

The three reasons

  1. 1

    Core longs (QSR, MDLZ, CMG, APD, HHC) are high-quality businesses in mid-transformation with untapped margin upside

  2. 2

    Herbalife short intact: FTC findings describe a pyramid scheme and injunction forces a 'top to bottom' U.S. restructuring

  3. 3

    PSH discount-to-NAV to be narrowed via London listing, FTSE UK inclusion, and buyback of up to 5% of public shares

Primary demands

  • Continue margin expansion at Mondelez toward best-in-class peer levels (17-18% by 2018)
  • Maintain Air Products operational transformation under CEO Seifi Ghasemi to close Praxair margin gap
  • Support Chipotle board refresh and recovery from food-safety incidents
  • Pressure Herbalife earnings as FTC-mandated business model restructuring takes effect
  • Advance PSH London listing and 5% share buyback to narrow NAV discount

KPIs cited

Mondelez 2016 EBIT margin
15.3%, vs Kraft Heinz 27.2%, Hershey's 20.4%, Smucker's 19.9% (peer gap chart)
Mondelez EBIT margin trajectory
11% (2013) to 15% (2016), targeting 17-18% by 2018 and higher 'optimized'
Air Products operating margin
23.1% in FY2016, up 400bps; 650bps+ historical gap to Praxair
Air Products FY2016 EPS
$7.55, up 14% despite 3% FX headwind
APD remaining productivity potential
$225mm, with $100mm to be realized in FY2017
QSR organic EBITDA growth 2016
16%; Burger King SSS +2%, Tim Hortons +3%; net unit growth 5%
Chipotle same-store-sales trajectory
Trough -36% Jan-16 recovering to +25% Jan-17
FTC Herbalife redress
$200mm in checks to ~350,000 victims; one of the largest FTC consumer-protection redress actions to date
MDLZ share price since entry
+17% (incl. dividends) from avg. cost to 4/18/2017
QSR share price since entry
+265% (3.65x) since merger with Justice Holdings
HHC share price since GGP spin
+234% (3.34x) since Nov-2010 spinoff
Valeant loss
VRX down 94% from average cost; position exited 2017
Q1 2017 PSH net return
-2.6% vs S&P 500 +6.1%
PSH Total Strategy AUM
$10,305mm as of 3/31/2017

Pattern membership

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

Notable slides (8)

Notes

Annual European investor meeting deck — a fund-level portfolio review, not a single-target activist thesis. Covers nine core positions (QSR ~21%, MDLZ ~15%, CMG ~13%, APD ~12%, HHC ~12%, HLF short ~-10%, FNMA/FMCC ~6%, PAH ~5%, NOMD ~4%), exited positions (Valeant acknowledged at -94%), plus PSH corporate updates (London listing, 5% buyback). Each position gets a short divider slide + thesis + progress bullets + annotated share-price chart. Notable specimen pages: p.14 MDLZ vs peers EBIT-margin gap bar chart; p.13 MDLZ margin progression toward 'optimized'; p.15/24 annotated event-driven price charts (a Pershing visual signature); p.37 CMG SSS trough-to-recovery line; p.45 three large pull-quotes from FTC Complaint framing Herbalife as a pyramid scheme; p.48 HLF short-inception timeline including Icahn's 13% stake; p.52-53 Mnuchin quotes supporting GSE reform. Overall tone is defensive/progress-report (post-Valeant blow-up) rather than aggressive new-thesis pitch. Visual craft is plain institutional PowerPoint — functional but uninspired, well below Ackman's Canadian Pacific 2012 tier. Filename prefix '2017-02' is misleading; cover date is April 24, 2017.