NEW YORK (Reuters) - Blackstone Group LP (BX.N), which invests clients’ money with William Ackman’s Pershing Square Capital Management, is sticking with the hedge fund manager despite his heavy losses in Valeant Pharmaceuticals International Inc (VRX.TO), said Tom Hill, president and chief executive officer of Blackstone Alternative Asset Management.
“We haven’t lost confidence in Bill,” Hill told the Reuters Global Investment Outlook Summit in New York on Monday. “You’ve got to know who you’re investing with. We know all his positions.”
Pershing Square has lost 21 percent this year through Nov. 10. It is one of the five largest investors in Valeant, whose shares have plunged more than two-thirds since early August over concerns about its financial practices and drug pricing.
“Bill Ackman is in a high beta, high volatility bucket,” said Hill, who is also vice chairman of Blackstone Group. “So from our standpoint, how do we deal with that? We say we’re going to make sure that we sized him right. He could be up 50 percent on the year. He could be down 30 percent.”
Hill said billionaire hedge-fund manager Larry Robbins of Glenview Capital Management LLC, which has been whiplashed by cratering investments in drug companies, hospital systems and insurers, was another great investor to follow.
“Larry didn’t get dumb overnight,” Hill said. “He is a really good investor, so there may be an opportunity for investors with a manager that has enormous credibility where he or she could say: ‘You know what? This is actually a very interesting moment to put more money and put capital in.'”
Hill said he expected the U.S. Federal Reserve to raise interest rates next month but that it would be in no hurry to push them much higher.
“I think they have gone out on a limb, and I think they see more risk in not raising than raising rates,” he said. “And so, one 25-basis point move, but lower for longer.”
Hill said no rate hike in December might signal that “the Fed is really worried” about global economic growth.
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Reporting by Jennifer Ablan and Jonathan Stempel; Editing by Lisa Von Ahn