Bloomberg Invest 2019

Summary

This Bloomberg segment, recorded during Pershing Square's 2019 investor day in London, is a third-person autopsy of Ackman's recent performance rather than an on-stage interview. The conversation opens with the observation that a "terrible year" often precedes a great one, then walks through why 2018 was uneven rather than catastrophic: a strong first half gave back gains in the final months, leaving Pershing Square with a roughly flat year after a December drawdown. The real subject is what the portfolio looks like on the other side — Chipotle, Restaurant Brands, ADP, and United Technologies as the standouts, with a new position in Starbucks and recent trimming of Chipotle after a run.

The second half turns to the vehicle itself. Pershing Square Holdings is described as a stagnant, beaten-up stock trading in London, and Ackman's response — share repurchases and a small dividend aimed at a 2.5% yield — is framed as an attempt to broaden the investor base rather than a tactical trade. The speakers also touch on the remaining Fannie Mae and Freddie Mac position, the sale of Nike, headcount reduction from 74 to 38, and the four new 2018 positions that were performing well at the time. There is no dramatic thesis or public fight here; the tone is that of a firm quietly shrinking, simplifying, and letting its existing holdings do the work.

Full Text

Machine-generated transcript (ASR); minor transcription errors may exist. Speaker turns and paragraphing restored editorially — words unchanged.

Interviewer:

Scot a very smart manager once told me that if you want to have a great year you need to have a really terrible one the year before is there any truth in that when it comes to when it comes to mr. Aikman

Interviewer:

well actually I don't think last year was his worst year on record they-they-they actually had a pretty uneven year year I think at the back end half of the back quarter of the year like most hedge funds a lot of the gains that they'd made over the course of the year were minimized and at the end of in December he lost ten point eight percent on his investments leading to a negative return of about 0.7 percent for the year as a whole

Interviewer:

so let's make it clear where he's made some of these gains and why we're looking at them today of all days because it's sort of a random day in February but there happens to be an investor day going on in London so that's why we're taking gear today - now yeah that's right and from the gains have come from Chipotle Mexican Grill which has had a huge run since the beginning of the year up 37 and a half percent yeah restaurant brands obviously it was the best performer in the portfolio 22.9% and ADP had a nice gain of 14 percent United Technologies as well as been a major performer where does he go from here it does he sell some of these

Interviewer:

well I mean we did see him trim some of the Chipotle ownership steak last year I think he took about a 401 million dollar share sale off took some profit so we could see some trimming but as it stands right now I think in particular like with his investment recent investment in Starbucks he mentioned in presentation today that he still sees a significant significant value be created and significant significant upside as well

Interviewer:

so we through the decision on the dividend and what the objective is there

Interviewer:

well Pershing Square holding is the publicly listed entity in London for for Pershing Square Capital Management and it it's kind of a stagnant stock and it's been beaten up a little bit so he's been doing a share repurchase program that's helped kind of drive returns as well but they want to broaden the investor base and by creating a dividend of it's a small dividend but still an amount of a 2.5% yield so the creating mr. bring in investors that might be interested in a dividend stock now you also have a nice little profit from selling Nike shares but he saw maybe sell them a little too early he could have made a little more but what

Interviewer:

do you think is his next move he's going to be at the active passive some summit here in New York yep

Interviewer:

coming up so we may hear about a new position

Interviewer:

but is he now next banking on housing finance reform is that were the next part of his well

Interviewer:

he's always said that you know there's a tremendous upside on Fannie Mae and Freddie Mac if you know this these reforms come through and they've held that those stocks for a long time now so they've been waiting for those returns to pan out but I would say generally the whole approach has kind of changed for Bill over the last little while he's obviously stepped back a little bit from the you know being in the media spotlight you know and in taken kind of a smaller more investment investment centric approach to Pershing Square

Interviewer:

yeah and some of the other things he points out in the in the in the presentation or that they've reduced head count to 38 from 74 at for new investments and by the way Hilton Worldwide is doing very well today

Interviewer:

yeah yeah you know obviously he hasn't completely given up on that investment either yeah it seems that you know there there were four new positions in 2018 all of them seem to be performing relatively well United Technologies is also one that's going through a major transformation so slows so we'll we'll see how that pans out over the course of the year

Key Themes

• Portfolio Concentration — trimming Chipotle after a 37.5% run while holding conviction in Starbucks, ADP, and United Technologies
• Capital Allocation Discipline — PSH buybacks and a modest dividend to close the discount on a stagnant, beaten-up stock
• Simple, Predictable, Free Cash Flow — the 2018-2019 book is built around franchised, payroll, and platform businesses with visible cash economics
• Wide Gap Between Price and Intrinsic Value — PSH itself is presented as mispriced: a permanent-capital vehicle trading below the value of its underlying holdings
• Volatility vs. Permanent Loss of Capital — the 2018 outcome is framed as volatility and uneven timing, not impairment of the underlying portfolio

Context & Significance

This material sits in Act IV, the renaissance, but it captures the moment when the turnaround was still a presentation rather than a settled fact. In early 2019 Ackman is barely two years removed from the Valeant exit and the Herbalife surrender. The firm has shrunk from 74 people to 38, abandoned public short campaigns, and reorganized around a closed-end vehicle that can buy back its own shares when the market misprices them. The speaker's description of PSH as a "stagnant stock" that has "been beaten up a little bit" is the honest market verdict Ackman is trying to reverse.

The mindset on display is defensive and operational, not confrontational. There is no proxy fight, no broken company to fix, no media offensive — only a manager explaining that the portfolio is performing, the team is smaller, and the structure is designed to survive the next drawdown without forced selling. The Fannie and Freddie position, still carried as a reform bet, is the last visible residue of the old opportunism. The honest retrospective is that 2019 looked like recovery only in hindsight; at the time, Ackman was still earning back the right to be judged on compounding rather than on crises.