Bill Ackman Crushed The Market Again In 2020

Rumors of Bill Ackman’s demise were greatly exaggerated. After a brutal three-year stretch from 2015 to 2017, Ackman’s Pershing Square Holdings Ltd PSHZF has now put together back-to-back years of stellar returns, and Ackman has eased fears that he lost his stock-picking touch.

As of Dec. 22, Pershing Square’s net asset value was up 67.5% year-to-date in 2020. Pershing Square’s stock is also up 82% in 2020, crushing the S&P 500’s 15.4% gains. From 2015 to 2017, Ackman’s fund lost about 30% of its NAV and lagged the S&P 500 by about 60%. However, Ackman followed up his 58% NAV gain in 2019 with another big year in 2020.

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Ackman’s Huge Year: Ackman boosted his 2020 returns with a spectacular $27-million short bet on corporate bonds back in March that ultimately netted him a $2.6-billion profit in what some have called one of the greatest trades in history.

Ackman also made headlines this year by raising $4 billion to launch his Pershing Square Tontine Holdings Ltd PSTH SPAC, which is now the largest SPAC in the market.

At the time of the IPO in July, Ackman said the SPAC planned to take about six months to identify a target and announce a deal in the first quarter of 2021.

Even after Pershing Square’s big run in 2020, the stock still trades at a significant discount to NAV. Pershing’s stock investing portfolio is relatively concentrated. As of the firm’s most recent quarterly filing, Pershing held shares of just seven stocks.

His three largest holdings include Lowe's Companies Inc LOW, Chipotle Mexican Grill, Inc. CMG and Restaurant Brands International Inc QSR.

Benzinga’s Take: Ackman has a long track record of home run trades and dud investments. In years like 2020, he seems like an investing genius, while past losing bets on Valeant Pharmaceuticals and Borders bookstores have left investors scratching their heads.

Investors should look for Ackman and his fund to continue to be high-risk, high-reward investments in 2021 and beyond.