“They Can No Longer Squeeze Pershing Square”: Ackman Converts Entire Herbalife Short Into A Put

Pershing Square’s Bill Ackman, who has been engaged in a 5-year long feud with Herbalife, betting its stock price would tumble to zero, came one step closer to admitting defeat on Wednesday when he told CNBC that his hedge fund recently restructured its position in the nutrition and supplements maker. “We converted the short position into a put position,” Ackman said in an interview with CNBC, adding that his firm’s potential losses on Herbalife will now be capped at 3 percent of the firm’s capital. “We can still lose money but the loss is capped.”
But the best part of the interview was the following admission:
“We’ve been entirely right on our Herbalife investment in terms of the fundamentals of the business. We’ve been wrong on the share price. A big part of that is the fact that companies repurchase a huge amount of shares,” Ackman said, confirming what we said back in 2012, namely that as a result of the company’s ongoing preference – following the advice of Carl Icahn – to reuse every dollar of cash flow to fund stock buybacks, those short the name stand to suffer tremendous pain… like Ackman. It’s also why HLF stock price just hit $73, more than 3x higher from where Ackman put on his short, and up more than 50% YTD.

This post was published at Zero Hedge on Nov 1, 2017.

Whitney Tilson Shuts His Hedge Fund… Again

Back in the summer of 2012, we had some fun when we reported that Whitney Tilson – the consummate, if always late immitator of other prominent investors especially Warren Buffett and Bill Ackman – following several years of abysmal returns, closed his then-hedge fund T2 (with Glenn Tongue), splitting off into his own, oddly-named venture, Kase Capital. Well, Whitney – who in recent years was better known for his bizarre family photos from Africa than managing money- has done it again and according to the WSJ, Tilson closed his hedge fund… again, “the latest high-profile investor to close shop amid an extended period of disappointing returns for the industry.”
As the WSJ adds, Tilson, 50, shared his decision with clients (apparently he still had some) on Sunday. His latest hedge fund, Kase Capital, which was managing a whopping 50 million at the time of closure, and down from a peak of $180 million, lost about 8% so far this year, a more than 20% underperformance relative to the S&P YTD gain of more than 13%.
As the WSJ adds sarcastically, “while he ran a relatively small fund, Mr. Tilson was a well-known hedge-fund manager thanks to television and conference appearances, as well as books and regular writing about investing and other topics.” In other words, Tilson was not so much a “hedge fund manager” as its straight-to-CNBC marketer, and the results have confirmed it.
In an amusing twist, in 2016 Tilson – a staunch never-Trumpter – inexplicably found himself the subject of scathing criticism by Elizabeth Warren, after Tilson expressed modest public support of some of President Donald Trump’s cabinet and other appointments from the banking world, “even though Mr. Tilson is a lifelong Democrat who voted for Hillary Clinton.”

This post was published at Zero Hedge on Sep 28, 2017.

Herbalife Surges After Announcing $600MM Stock Buyback, Failed LBO Transaction

One week after Herbalife stock tumbled following concerns of yet another Chinese crackdown on multi-level marketing scheme, Carl Icahn has struck again, squeezing his nemesis Bill Ackman who continues to be short the name, after Herbalife announced on Monday morning that while the company had tried and failed to pursue an LBO, it has instead entered into a pact with Carl Icahn and unveiled a “self-tender” offer according to which it would pursue a whopping $600 million buyback, equivalent to about 10% of its market cap, purchasing shares at a price between $60 and $68, effectively assuring that the company’s stock price would trade in this narrow range, absent a dramatic adverse development.
Some details on the failed “go private” transaction:
The Company was recently in discussions with a prospective financial investor regarding a potential transaction that could have led to the Company being taken private. While these conversations were formally terminated on August 16, 2017, because these discussions contemplated the possibility of the Company being taken private, the Board of Directors decided to provide tendering shareholders with some protection in the event the Company is taken private within two years resulting in remaining shareholders possibly receiving a higher price than paid in the self-tender.

This post was published at Zero Hedge on Aug 21, 2017.

“Doomsday Trainwreck” Is Coming To Manhattan Luxury Real Estate, Barry Sternlicht Warns

It’s been a while since we checked in on the state of Manhattan’s ultra high end real estate market, and judging by what was said in the latest Starwood Property Trust earnings call, where CEO Barry Sternlicht warned of a doomsday waiting at the end of New York’s “Billionaire’s Row”, what’s coming is nothing short of a disaster. During the Starwood Q2 earnings call, Sternlicht said the development of ultra high-end residential building on West 57th Street – where two years ago Bill Ackman among others parked $91.5 million – an imminent “debacle.” He pointed out the out-of-balance mezzanine loan at JDS Development and Property Markets Group’s 111 West 57th Street project and predicted more distress in the luxury residential market, including at 53 W 53, a supertall condo being developed next to the Museum of Modern Art by Hines, Pontiac Land Group and Goldman Sachs, as the Real Deal reported.
‘We are beginning to see the cracks of the high-end residential market in Manhattan,’ Sternlich warned, putting in jeopardy future seasons of Million Dollar Listing. ‘The building on 57th Street just went through it’s B-lender. Those deals, and the building going up next to MoMA, those deals are going to be a disaster. So high-end resi in New York really is in trouble.’
Sternlicht also noted that just like during the last bubble peak, most exposed to loans backing luxury condos are not the banks but rather hedge funds, private equity firms and alternative lenders chasing high returns who have backed projects with asking prices of $7,000 to $10,000 a foot.

This post was published at Zero Hedge on Aug 15, 2017.

15% Of Greenlight Capital Investors Submit Redemption Requests

While, inexplicably, Bill Ackman’s Pershing Square remains immune (according to Ackman at least) to redemptions despite posting a terrible return in the past two years, another hedge fund from the “glory days” is having less success in keeping LPs: the WSJ reports that Einhorn was “forced to pay back more than $400 million in clients withdrawals at midyear, as more than 15% of eligible investors chose to redeem their money” which again is surprising because unlike some other hedge funds, mostly on the macro side, which continue to post double digits losses, Greenlight was down only 2% in the first half of the year. Although, as we have been repeating since 2011, in a time when every hedge fund’s benchmark is the S&P actively managed by every central banker in the world, any and all active managers who underperform the broader market are targets. Greenlight has also underperformed his broader peer group with the average stock-picking hedge fund up 6% in H1 according to HFR.
As the WSJ notes, Einhorn, who manages $7 billion, “has been humbled. His repeated predictions of a swoon for some highflying technology companies are so far unrealized, while a recent push to split General Motors Co. stock was rejected by his fellow shareholders. Greenlight is just two years removed from its worst year ever, double-digit losses in 2015 that led Mr. Einhorn to confess at the next annual investor dinner that he had ‘failed miserably.’

This post was published at Zero Hedge on Jul 13, 2017.

Fannie and Freddie, Back in the Black

Fannie Mae and Freddie Mac were among the biggest disasters of the financial crisis. In September 2008, nine days before Lehman Brothers failed, the federal government took over the mortgage companies; it eventually spent more than $187 billion bailing them out. For decades, the companies had provided an implicit government backstop to the U.S. mortgage market, buying loans from private lenders and guaranteeing payments to investors. That helped spur a steady rise in home ownership – until the subprime crisis hit and Fannie and Freddie were on the hook for billions in losses.
Lawmakers vowed to overhaul the companies and some planned to wind them down completely. But more than eight years later, Fannie and Freddie still operate under government control – and they’re now a bigger part of the system, guaranteeing payment on just under half of all U.S. mortgages, up from 38 percent before the crisis.
There is one key difference: Any profits the companies generate go to the government instead of investors. The latest payment, a combined $9.9 billion to the U.S. Treasury at the end of March, pushed the total amount of cash Fannie and Freddie have paid to taxpayers to $266 billion, making their bailout one of the most profitable in history.
There’s now a pitched battle over who should get those profits. The companies’ pre-crisis common and preferred stocks still trade over-the-counter, and investors who snapped up the shares, such as hedge fund managers Bill Ackman and John Paulson, say Treasury is breaking the law by taking the money. The fight goes back to a change the Barack Obama administration made to the bailout terms in 2012.

This post was published at bloomberg

Bill Ackman’s Three Worst Investments of All Time [LIST]

Money manager Bill Ackman’s hedge fund Pershing Square once boasted extraordinary returns. For instance, in 2014, the fund beat out the S&P 500 by a whopping 27%, with 40% gains.
However, Pershing Square’s returns are not what they use to be…
Last year, the fund posted a negative return of 13.5%; in 2015, it returned negative 20.5%, significantly underperforming markets two years in a row. In fact, since the end of 2012, Pershing has returned 5.7% to investors, while the S&P 500 has skyrocketed 67.4%.
Majorly contributing to Pershing’s recent sagging returns is that three of Ackman’s worst trades ever all happened over the past two years…
Bill Ackman’s Biggest Blunder No. 3: Target Corp. (NYSE: TGT)
In 2007, Ackman set up Pershing Square IV, a single-stock fund that invested $2 billion in Target Corp. (NYSE: TGT) call options and other derivatives that year. The fund ended up losing 90% of that money after TGT shares plummeted 50% in 2009. At the time, Target’s ‘expect more, pay less’ slogan became half irrelevant as consumers began to shy away from the retailer in favor of Wal-Mart, which was cheaper and offered a wider food selection.
In May 2009, Ackman said that Target’s board was too ‘cozy’ and ‘insular,’ and it lacked members with requisite retailing, credit card, and real estate backgrounds. In a letter to shareholders, Ackman said Target ‘has substantially underperformed its potential’ due to the board.

This post was published at Wall Street Examiner on March 17, 2017.

Gartman Is About To Short “Industrialized World” Markets

One day after gloating at Bill Ackman over his $4 billion loss on Valeant, Dennis Gartman is back with his latest trade reco which may be worth paying attention to: he says that while he is getting “bullish of Japanese shares”, he is offsetting this with an imminent short of markets across the “industrialized” world. To wit:
We are bullish of Japanese shares and have an initial position in place long of the Japanese stocks via ETFs here in the US, but we wish only to be long of those ETFs that hedge away our exposure to a weaker Japanese Yen. Our preferred position then is in DXJ:Wisdom Tree’s currency hedged Japanese ETF. Further, it is our intention to add to this position but not until such time as the ‘spot’ Nikkei closes ‘materially’ above 16,600. Indeed, yesterday we clarified that statement, saying that when and only when the Nikkei has traded above 16,750 shall we act. We stand by that statement. Secondly, although we’ve not yet acted upon this thesis, we wish also to err upon the side of owning Japanese equities while being short of the markets of the rest of the ‘industrialized’ world. We’ve refrained from taking that position ahead of the FOMC meetings and we shall refrain from doing so today; but barring some untoward and/or surprising event at the meeting’s end today, almost certainly we shall take such action tomorrow. Until then, we shall sit tight.

This post was published at Zero Hedge on Mar 15, 2017.

Can Valeant Go To Zero?

Valeant (VRX) stock is now at $10. After a brief, Roman Candle launch to $260, $10 is the level where it traded in early 2009. It may be one of the few stocks that has gone back its financial crisis trading level. It is now likely on a long, slow death march to zero.
It was reported that Bill Ackman has completely liquidated his Pershing Square hedge fund position in VRX. Any institutional investment manager or pension fund who left its investment in Pershing Square long enough to see this happen should be investigated for breach of fiduciary duty. Ackman’s fund reportedly lost over $4 billion in VRX. I suspect that number was massaged to the low side for public consumption purposes.
I began to look at VRX with a fine-tooth comb just about 12 months ago. On March 15, 2016, I wrote: ‘The SEC Should Suspend VRX Trading: The Company Smells Like Enron.’ The stock had dropped fro $260 to $37 in less than a year:
The initial triggers were concerns over the Valeant’s drug-pricing policies and questions surrounding its methodology for booking revenues. However, with just a casual ‘look under the hood’ at VRX’s SEC-filed financials, there is likely a great deal of fraud lurking beneath what’s already been questioned. In fact, this is starting to smell a lot like Enron or Bear Stearns. The only component missing from this story is a CNBC rant from Cramer issuing a table-pounding buy on VRX stock. That may yet occur.
To begin with, the Company is carrying $30.2 billion in long term debt against just $9 billion of tangible assets. $39 billion of VRX’s assets is in the form of goodwill and intangibles. VRX’s self-assessed book value is $6.4 billion. But VRX’s tangible book value is negative $32.6 billion.

This post was published at Investment Research Dynamics on March 14, 2017.

Ackman Capitulates: Sells Entire Valeant Stake; Stock Tumbles

Valeant shares plunged after the close after CNBC’s David Faber first reported that Pershing Square’s Bill Ackman had liquidated his entire stake, and has effectively resigned from the board, saying he won’t stand for re-election. According to Bloomberg, Pershing Square is offering 27.23 million shares via Jefferies, at a price of $11.10-$11.40.
Quoted by Reuters, Ackman had the following brief statement on what may have been his worst ever investment: “It was time to get out of the position, investment required disproportionately large amount of time and resources.”
The stock plunged as much as 10% on the news.
Having spoken to Ackman, CNBC’s Scott Wapner tweets that Bill Ackman said he leaves Valeant ‘in a position where the business can recover.” He adds that Ackman sold the stake ‘because position couldn’t move the needle’ for Pershing Square ‘even if stock doubled from here.’ Ackman also admits that he didn’t realize how bad VRX situation was until he joined the board.

This post was published at Zero Hedge on Mar 13, 2017.

David Einhorn Gets A Divorce, Shorts Sovereigns, Is Bullish On Gold

First it was Ken Griffin, then Bill Ackman, now it’s David Einhorn’s turn.
Perhaps eager for a complete “change of scenery” after years of moribund returns, some of America’s most prominent hedge fund managers are taking the metaphorical knife to their personal lives, and wives.
According to the Post, David Einhorn is separating from his wife of 24 years, Cheryl Strauss Einhorn, and the pair is heading for divorce. The billionaire Greenlight Capital founder, whose stock picks have moved markets, if perhaps a little less in recent months, has separated from Cheryl, whom he married in 1993 before he made his fortune, now estimated at $1.55 billion.
Among the possessions at stake in the upcoming divorce is the 10,000-square-foot home in Rye, NY, and supposedly Einhorn’s rumored vault of gold stashed at a secret location in New York City. He has said the gold is used by his fund as a hedge against inflation.

This post was published at Zero Hedge on Feb 23, 2017.

Helicopter Money Has Arrived… And Nobody Noticed: Here’s Why

Deutsche Bank’s Jim Reid is one of the few strategists on Wall Street to admit he was wrong (although he may still end up being right). Previewing his annual credit outlook titled “Volatility Ahead”, Reid confesses that “we’ve long felt that as we approached 2017 we would likely be at the turning point of the credit cycle. Indeed our forecasts are for wider spreads in our annual outlook for the first time since the Euro Sovereign crisis earlier this decade. However in the course of writing this outlook much has changed.”
The strategist admits that, alongside virtually everyone else on Wall Street, he became bullish, overnight on just one catalyst: the election of Donald Trump, which was universally panned by most experts (if not here) as a major selloff catalyst only for everyone to pull a “Bill Ackman” and realize the next morning that (as we explained) that Trump is actually extremely bullish for risk assets.
“The forecasts are less bearish than they would have been when we started writing this publication in late October partly because spreads have widened notably since and also the probabilities of a US recession in 2017 have lessened given the possibility of aggressive fiscal spending from the new US administration.”
Naturally, this is the bullish assumption which in the past two weeks has been adopted by all, namely that Trump will unleash a trillion dollar (or more ) debt issuance spree, aka “massive” fiscal stimulus, an assumption which we explained yesterday will soon be challenged by Congressional Republicans. However, more than a simple political hurdle, a greater gating factor is what happens to interest rates, a traditional buffer to risk assets any time the economy is on the verge of overheating: should they rise too high, the entire stock market house of cards falls.

This post was published at Zero Hedge on Nov 22, 2016.

SP 500 and NDX Futures Daily Charts – Banks and Criminal Culture and the Intersection Thereof

Stocks were weak today despite some attempts to rally them up.
The overhang of three major central bank meetings this week and the US Non-Farms Payroll had the punters sitting on the sidelines.
OPEC failed to agree on production cuts, so the price of oil slumped a bit today as well.
Two Ex-execs of Valeant Pharmaceuticals are being probed for fraud. I believe the stock has lost something like 80 % of its value since Bill Ackman pledged his fund’s money to it.

This post was published at Jesses Crossroads Cafe on 31 OCTOBER 2016.

Perry Capital Shutting Down His Iconic Flagship Fund

The writing was on the wall three weeks ago when we reported that iconic hedge fund Perry Capital had lost some 60% of his AUM as LPs were rushing to withdraw their money.
As we reported on September 10, citing Bloomberg, Perry Capital’s assets slumped to $4 billion as of the end of August compared with $10 billion in September last year. The reason for the tremendous outflows is that Perry has posted losses of 18.4% from the beginning of 2014 through July of this year. The fund declined 2.6% in the first seven months of this year after losing 12.6% in 2015.
Curiously, as on numerous previous occasions, while Perry’s losses aren’t even that substantial, in a time when the S&P500 just can’t go negative courtesy of central banks, LPs patience has become non-existent (however, a shocking outlier in this regard is Bill Ackman’s Pershing Square, where the LPs have continued to amaze the investing community by not redeeming what’s left of their assets despite one terrible investment decision after another).

This post was published at Zero Hedge on Sep 26, 2016.

Chipotle Soars After Bill Ackman Reveals 9.9% Stake, Goes Activist

Many thought that having been squeezed between the terrible performance of his Valeant long and his “career” Herbalife short, that Bill Ackman would quietly fade into the sunset, facilitated by the dreadful YTD performance of his hedge fund. No such luck, and as he revealed moments ago in a 13D filing, the Pershing Square founder has just gone activist on Chipotle, revealing a 9.9% stake, and announcing he intends “to engage in discussions with the Issuer and Issuer’s management and board of directors, other stockholders of the Issuer and other interested partiesthat may relate to the governance and board composition, business, operations, cost structure, management, assets, capitalization, financial condition, strategic plans, and the future of the Issuer.“
From the report:

This post was published at Zero Hedge on Sep 6, 2016.

Hedge Funds Set for Worst First Half Since ’11 on Turmoil

Funds lost 1.1 percent this year through June 29, according to Hedge Fund Research Inc.’s Global Hedge Fund Index, on pace for the worst first-half performance since 2011, when they slid 2.1 percent. Firms will update investors on their June returns starting Friday.
Bill Ackman is among the losers, extending his slump after a dismal 2015. The publicly traded security of his activist fund dropped 21 percent through June 21, according to the Pershing Square Holdings Ltd. website. Lansdowne Partners, one of Europe’s largest hedge funds, fell about 14 percent through June 24 in its main pool, while its Developed Markets Strategic Investment Fund declined almost 16 percent, a client update shows.
Managers started on a bad footing as the yuan weakened sharply in January, leading to a 2.8 percent decline for the industry. Multimanager funds, some of which held similar positions, were hit hard in February as their tight risk controls forced them to sell securities at the same time, further depressing prices. Some of the most prominent managers were hurt in mid-March by their holdings in Valeant Pharmaceuticals International Inc. when the stock plunged anew.
Around the same time, manager Crispin Odey called markets a ‘battlefield’ as his portfolio was rising and falling by more than 5 percent a day. In an April letter to clients, Dan Loeb said the business was in the first stages of a washout after one of the most ‘catastrophic’ performances he’s seen since he started his hedge fund in the 1990s. Funds including Martin Taylor and Nick Barnes’s Nevsky Capital and Barry Wittlin’s WCG Management liquidated, while Brevan Howard Asset Management and Tudor Investment Corp. were hit with investor withdrawals.

This post was published at bloomberg

The Top 100 Hedge Funds Of 2016 According To Barron’s

Household hedge fund names such as Bill Ackman’s Pershing Square, Daniel Loeb’s Third Point Capital and David Einhorn’s Greenlight Capital are nowhere to be found in the Barron’s 2016 List of Best 100 hedge funds. Instead, these firms which bet heavily, and incorrectly, on a handful of investments, have been replaced by a variety of newer, smaller, nimbler, and in the case of the top fund for 2016, algo-driven, hedge funds.
As Barron’s notes, even on Wall Street, “the name of the Barron’s Penta No. 1 hedge fund this year is one that many serious investors wouldn’t recognize. Parametrica Management, a small Hong Kong – based firm, posted a three-year compound annualized return of nearly 30% by the end of 2015, about double the return of the Standard & Poor’s 500 index. A remarkable gain of 45% in 2015’s occasionally frightening market helped the stock-focused quants at Parametrica’s Global Master fund leap 58 spots from its previous ranking.”
Appropriate for the times, Parametrica ignores fundamental analysis entirely and instead specializes in stat arbitrage, a strategy that relies on quantitative analysis to identify instantaneously mispriced asset classes anywhere in the world – think Jim Simmons flagship Renaissance Medallion fund. These market-neutral funds feed on the kind of instability and dispersion in prices that overtook markets for much of 2015 in the U. S., Europe, and especially emerging markets.
Some more details on this year’s winner.

This post was published at Zero Hedge by Tyler Durden – Jun 21, 2016.

Peak Insanity: This “Trophy Apartment” In Manhattan Is Going For A Cool $250 Million

In April we pointed out that due to an already abundant supply of condos on the market, luxury real estate developer Extell Development Co couldn’t sell luxury condo’s at its One57 tower, in the heart of New York’s premier ultra luxury destination.
Extell decided that instead of leasing luxury apartments, it would sell the units as higher end apartments in order to fill vacancies and generate cash. As a reminder, Bill Ackman paid $91.5 million for a condo in One57 in April of 2015 just “for fun” in hopes of flipping the unit at some point.
As luck would have it, Ackman now has an even bigger investment opportunity in One57.
Extell Development filed documents in April with the state attorney general’s office which revealed that there is a “trophy apartment” (prices ranging from $10 million to $45 million) for sale in the complex, with a price tag of a cool $250 million.

This post was published at Zero Hedge on 05/31/2016.

Herbalife First Soars Then Dumps After FTC Settlement Report Is Denied

Update: According to CNBC, there will be no imminent settlement report, which just confirms that as we warned in the original post, the NY Post continues to be mostly a source of disinformation and hedge funds peddling their own positions.
The market may be surging again, but that will hardly comfort Bill Ackman who later today is expected to report later today that his hedge fund remains roughly 20% YTD, or perhaps even worse following news from the NY Post, that his most hated stock ever, Herbalife, has reached “an agreement in principle with the Federal Trade Commission to settle a years-long probe into whether it was a pyramid scheme”, as a result of which the stock is soaring.
This follows the company’s announcement earlier this month that it was close to a settlement with the FTC.

This post was published at Zero Hedge on 05/24/2016.

Manhattan’s Real Estate Woes Get Worse: No Demand In Building Where Ackman Splurged $90 Million

Over the weekend, we asked the question, Did the Canary of New York’s Luxury Housing Market Just Die, following reports of the bankruptcy of a New York luxury real estate developet. Now, just two days later, we learn that another high-end real estate developer is having trouble closing out an ultra-luxury project in Manhattan.
Courtesy of Bloomberg, we find that luxury real estate developer Extell Development Co can’t sell luxury condos at what may be New York’s premier ultra luxury destination, the One57 tower, which it is attributing it to the fact that there is an abundant supply of condos already on the market. As a reminder, One57 is where Bill Ackman paid $91.5 million in April 2015 for a condo (which he hoped to flip), just a few months before Valeant, and his fund, suffered staggering losses. Perhaps that should have been the tell.
The situation has gotten to the point that instead of leasing luxury condos, Extell will now try to sell the units as higher end apartments. Said otherwise, there is suddenly no market for luxury condos right now, and developers will have to try and capitalize on investments at a lower price point than originally planned.
As the following chart shows, the median price of luxury Manhattan apartments has fallen 3.5% y/y through March, reiterating the fact that oversupply and slowing demand are taking a toll on prices

This post was published at Zero Hedge on 04/12/2016.