By Svea Herbst-Bayliss and Katya Wachtel
NEW YORK Aug 5 It was a tough July for hedge
fund manager William Ackman, whose $11.16 billion Pershing
Square Capital Management lost 2.2 percent during the month,
according to three investors.
The fund got hit hard by its short position in nutritional
supplements company Herbalife Ltd, which saw its share
price rise more than 40 percent last month. Ackman's fund has
invested $1 billion on a bearish bet that Herbalife will be
unmasked by regulators as a pyramid scheme.
A long position in retailer J.C. Penney Co Inc also
hurt the fund as the stock slid about 17 percent in July.
Pershing Square remains up 3.8 percent year to date,
according to the investors. The sources did not want to be named
because they were not authorized to speak publicly about the
private fund's returns.
A representative of the hedge fund declined to comment.
Hedge fund returns rose about 1 percent last month according
to early estimates by Bank of America Merrill Lynch, while the
S&P 500 stock index climbed 4.95 percent. For the year, funds
have risen roughly 3.6 percent on average, according to that
Bank of America data, while the S&P 500 was up 18.2 percent
Pershing Square had gained 2.2 percent in the first two
weeks of July, sending yearly gains to about 8 percent through
July 15, Reuters previously reported. Despite the disappointing
bets on Herbalife and J.C Penney, some of Ackman's other big
holdings, such Procter & Gamble and Canadian
Pacific, have performed well this year.
But losses in Ackman's New York-based hedge fund mounted
during the second half of July. The hedge fund reported to
investors its assets under management fell to $11.16 billion
through the end of July, down from about $12 billion in June.
As of July 30 Pershing Square had incurred at least $300
million in losses on its Herbalife trade, Reuters previously
On July 31 Herbalife shares soared even higher after media
reports revealed billionaire investor George Soros had taken a
large long position in the company, sending the stock to its
highest price since May 2012.
On the same day, Ackman unveiled his biggest bet ever with a
$2.2 billion investment on Air Products & Chemicals Inc.
Ackman said in a filing that he believes the company to be
"undervalued" and an "attractive investment."
According to a July note sent to Ackman's investors,
Pershing Square's portfolio is composed of 10 long positions and
one short position. The note doesn't mention Herbalife by name.