Multiple holdings (Pershing Square portfolio)
Fund-level recap after Q1 2016's -25.6% drawdown: Ackman defends the contrarian book — MDLZ margin upside, APD turnaround, CP execution — while reaffirming the Herbalife pyramid-scheme short.
Thesis
Pershing Square's April 2016 European Investor Meeting recaps a brutal Q1 (-25.6% net) driven by an 83% drawdown in Valeant, the fund's largest detractor. Ackman walks investors through the contrarian book — Mondelez (5.7% stake, 600-700bps EBIT margin upside via 3G-style ZBB versus a Heinz precedent of +900bps), Air Products (CEO Seifi Ghasemi's turnaround delivering 22% margins and the Versum spin), Zoetis (8.6%, $300mm cost-out program), Restaurant Brands (3G-operated franchise compounder, +165% since merger), and Canadian Pacific (record 58.9% operating ratio after the Hunter Harrison transformation). Valeant gets a rescue-mode update: Ackman joined the board, Pearson is being replaced by Joe Papa, and stabilization is underway. The Herbalife short thesis is reaffirmed with declining recruitment, fabricated 'Active New Members' metrics, and a looming FTC action. PSH trades at a ~10% discount to NAV with 'permanent capital' cushioning the drawdown.
The three reasons
- 1
Mondelez has ~600-700bps of EBIT margin upside above management's 2018 target via 3G-style ZBB
- 2
Q1 -25.6% drawdown is mostly Valeant; the rest of the book is intrinsically undervalued
- 3
Herbalife pyramid is no longer growing — recruitment declining, FTC action appears imminent
Primary demands
- Mondelez: adopt 3G-style zero-based budgeting to push EBIT margins to ~24% (vs 17-18% 2018 target)
- Valeant: replace CEO Mike Pearson (Joe Papa announced), refresh board, file 10-K, stabilize
- Herbalife: regulators (FTC) should shut down the pyramid scheme
- Continue execution at Air Products, Zoetis, Canadian Pacific, Restaurant Brands
KPIs cited
Pattern membership
Precedents cited
- Heinz under 3G (+900 bps EBIT margin in ~2 years)
- Anheuser-Busch under InBev (+1,300 bps in ~3 years)
- Canadian National transformation (Hunter Harrison)
- Vemma FTC complaint as roadmap for Herbalife
Composition what's on the 82 slides
Slide gallery ·
Notes
Fund-level annual investor update, not a single-target activist thesis — covers ~10 portfolio positions (MDLZ, APD, ZTS, QSR, CP, HHC, VRX, PAH, FNMA/FMCC, NOMD) plus the Herbalife short. Delivered immediately after Pershing's worst quarter (Q1 2016 -25.6%) driven by 83% Valeant drawdown; framed as defense of the contrarian book and reaffirmation of conviction. Notable rhetorical moves: signature annotated stock-price timeline charts on every position (pages 22, 26, 32, 40, 44, 51, 55, 58, 61, 70); peer-gap EBIT margin chart for Mondelez (p.14); 3G/Heinz precedent chart (p.16); Herbalife CEO recruitment quote contradiction (p.62); Des Walsh 'never been greater' contradiction (p.66). No specific closing ask — closes with personnel updates and Q&A. SCQA fields set to null because the deck has no single unifying thesis (it is a portfolio recap). target_company set to 'Multiple holdings' for the same reason. stake_disclosed_pct null at firm level — individual stakes disclosed per position (MDLZ 5.7%, ZTS 8.6%, VRX ~9%).