After a few years of underperformance, 2019 is looking like it could be a strong one for Pershing Square Holdings (PSH).
PSH is the listed closed-ended fund version of Bill Ackman’s Pershing Square hedge fund which today’s results show has performed well. NAV per share has increased by 38.4 percent year-to-date (YTD) while the S&P 500’s total return has been 13.9 percent.
Topping the list of best performing investments is Chipotle Mexican Grill. Mr Ackman said in a statement regarding the company “[its] first quarter results continued to demonstrate the significant progress that CEO Brian Niccol and his team have made in dramatically improving performance and positioning the company for long-term sustainable growth”. The 10.1 percent of positive performance to the fund.
Automatic Data Processing, a company in which Mr Ackman has been engaged in an activist campaign to change their board also did well in the first quarter. Renowned UK investor Terry Smith may not appreciated Mr Ackman’s actions with this company but it contributed 4.2 percent to the upside performance in Q1.
Mr Ackman said: “ADP shares have appreciated 21% year-to-date. We continue to believe that ADP has a significant opportunity to accelerate top-line revenue growth and expand margins, which should allow ADP to compound earnings at a mid-to-high-teens growth rate for many years to come.”
Burger King owner Restaurant Group is yet another strong performer in Q1, contributing 4.8 percent to funds gains. Regarding the company Mr Ackman said: “[Its] most recent earnings results continue to reinforce our thesis that the company’s royalty-based, franchise model is a uniquely valuable business with a large, long-term, capital-light, unit-growth opportunity.”
Pershing Square has shown that the large concentrated bets that are indicative of hedge funds can still pay off. 2018 may have been a horror show for the asset class and the fund really needs to bring down its substantial discount to NAV but early indictors are this may be Mr Ackman’s year.
