Pershing Square portfolio (multi-holding LP update: MDLZ, VRX, APD, ZTS, CP, QSR, HHC, PAH, FNMA/FMCC, HLF short)
After a -20.5% 2015, Pershing concedes mistakes on Valeant/Platform/CP but argues its portfolio holdings trade at a substantial discount to intrinsic value and that permanent capital lets it wait for convergence.
Thesis
Pershing Square delivered -20.5% in 2015 versus the S&P 500's +1.4%, with losses concentrated in Valeant (-11.4%), the Herbalife short (-3.9%), Canadian Pacific (-3.8%) and Platform Specialty (-2.8%). Ackman concedes three mistakes: over-reliance on 'platform value,' missed exit windows at Valeant (~$250) and CP (~C$240), and underweighting regulatory and political risk. Despite these missteps, the firm argues its portfolio — Mondelez, Air Products, Zoetis, Valeant, Canadian Pacific, Restaurant Brands, Howard Hughes, Fannie/Freddie, Platform and Nomad — still trades at a substantial discount to intrinsic value, blaming oil/China dislocations, forced selling by Pershing 'followers,' and index-fund flows that bypass its mostly non-index longs. With ~49% permanent capital (including a new $1B PSH bond) cushioning volatility, Pershing plans to ride out the drawdown rather than restructure, flagging at least one likely new major investment in coming months.
The three reasons
- 1
2015 was -20.5% but portfolio trades at substantial discount to intrinsic value
- 2
Permanent capital base lets us wait for market price and intrinsic value to converge
- 3
Holdings still have company-specific catalysts (ZBB at MDLZ, Versum spin at APD, CP-NS merger)
Primary demands
- Continue 3G-style margin transformation at Mondelez (EBIT margin from ~14% toward Heinz-tier ~24%)
- Close Air Products' ~500-600 bps margin gap vs. Praxair; execute Versum Materials spin-off by Sept 2016
- Execute Zoetis $300m cost-reduction program and operating-margin expansion to ~34% by 2017
- Pursue CP Rail-Norfolk Southern merger for ~US$1.8bn of synergies
- Regulators shut Herbalife as an illegal pyramid scheme
KPIs cited
Pattern membership
Precedents cited
- Heinz under 3G Capital (+600 bps global gross margin in ~2 years)
- Anheuser-Busch under InBev (+1,300 bps EBIT margin in ~3 years)
- CN transformation under Hunter Harrison (invoked as CP template)
Slide gallery ·
Notes
Annual LP update covering full portfolio, not a single-target thesis deck. Post-mortem framing is unusually candid for Pershing: page 16 'Principal Mistakes We Made in 2015' explicitly names Valeant ('we relied too much on platform value', 'did not sufficiently discount regulatory risk at $196 average cost'), Platform Specialty, and CP as trim-miss errors. Page 18 'While We Wait for the Weighing Machine' is the strongest SCQA moment — classic Buffett/Graham invocation to justify staying the course. Herbalife section (pp.87-94) is the only adversarial/short thesis and uses CEO Michael Johnson's recruiting quote as the contradiction device. Mondelez section (pp.20-30) is the cleanest peer-gap + 3G-precedent case and is the most reusable for a swipe file. Deck uses standard Pershing Square blue-and-green institutional template — clean but not editorial-tier. SCQA fields set to null per extraction guidance for fund-level updates without a single thesis; stake_disclosed_pct null because document discloses per-position stakes (MDLZ ~6.6%, ZTS ~8.6%) rather than one aggregate.