What a difference a week makes for Bill Ackman.
After bleeding money for the past two years in a row, Ackman’s Pershing Square hedge fund is not only in the black for 2017, it’s actually beating the market for the first time in a very long while.
Last year, Ackman’s hedge fund lost 13.5%, following its 20.5% drop in 2015--the worst stretch in the history of Pershing Square. An investor who put $1 million in the fund at the beginning of 2015 would have watched it shrink to less than $700,000 by the end of 2016. Investors could blame a substantial share of their losses on a 95% decline in the stock price of Valeant Pharmaceuticals , which cost Ackman more than $3 billion of his massive $4 billion investment in the company. (Pershing Square currently has about $11 billion under management.) But Valeant stock wasn’t the only culprit: Nearly a year ago, almost all of Ackman’s stocks were down.
As of this week, however, Ackman seems to be turning things around. His Pershing Square hedge fund is up about 4.8% year to date, the firm disclosed late Wednesday. That’s ahead of the S&P 500, which was up 4.4% over the same period (through Tuesday, Feb. 14).
Much of Ackman’s outperformance occurred just in the past few days, during a banner week for stocks that was even better for the hedge fund manager. Last week, Pershing Square was still lagging the market for the year, up only 0.3% compared to the S&P 500’s gain of 2.4%. A week later, Ackman had surged ahead, with all but one of his stock holdings (Air Products & Chemicals ) up for 2017.
It was the greatest positive weekly swing for Ackman’s fund since December 2014, more than two years ago.
The biggest difference maker: Valeant. After being down 2% for the year through last week, has since risen more than 12%, including a gain of nearly 7% on Tuesday alone, juiced in part by anticipation of the FDA approval for one of its new drugs, which it received Thursday. (Though Valeant shares rose almost another 6% Wednesday, they gave some of it back following the FDA approval, declining almost 4% Thursday.)
In dollar terms, an even larger contributor to the week’s jump in performance was Restaurant Brands International , the company that owns Burger King and Canadian coffee chain Tim Hortons. Restaurant Brands’ stock gained nearly 9% during the last week, Ackman reported, thanks partially to its strong quarterly earnings report on Monday. Because the fast-food company is now Ackman’s top holding--his stake is worth more than $2 billion--that gain boosted his portfolio by roughly $175 million in a single week. (A third, smaller Ackman holding, Platform Specialty Products , is up 32% this year, but that outperformance hasn’t had a major impact on the fund’s overall returns.)