Ackman's Pershing Square ekes out gain in September

Reuters

By Svea Herbst-Bayliss

BOSTON, Oct 2 (Reuters) - William Ackman's Pershing SquareCapital Management staunched two months of bleeding inSeptember, as his flagship fund eked out a gain, leaving itsreturns for the year roughly flat, according to a performanceupdate.

The activist investor told clients that the Pershing SquareLP fund gained 0.2 percent last month, an improvement fromAugust's 3.6 percent loss and July's 2.2 percent decline,according to an update that was seen by Reuters.

While Ackman did not say what helped the fund, it is clearthat he benefited from exiting J.C. Penney shares at theend of August, before the retailer's stock price tumbled 30percent in September.

Ackman, once the retailer's biggest shareholder, a boardmember and its most public cheerleader, sold his 18 percentstake in J.C. Penney at $12.90 a share. Other prominentinvestors who had also been big shareholders, including GeorgeSoros, Richard Perry and Kyle Bass, likely suffered heavy lossesas the stock price dropped sharply. It closed at $8.72 onWednesday.

Still the Penney debacle, where Ackman lost roughly $500million, has left its black mark on Ackman's fund, which startedthe year with a 6.2 percent gain in the first quarter. Ackman isstill considered a very talented investor, however, and he hasdelivered an average annual return of 20 percent since launchingthe fund in 2004.

The fund is up 0.5 percent for the year through the end ofSeptember, trailing the 4 percent gained by hedge funds, onaverage, and lagging far behind the roughly 19 percent gained this year by the Standard & Poor's 500 stock index.

The fund, which started the year with $12 billion, nowmanages $10.8 billion, the performance update said.

Gains in stocks, including Beam, Canadian PacificRailway and Air Products & Chemicals, whereAckman announced an activist position in late July, helped thefund. But its $1 billion short bet against Herbalife hurt as the food supplement's company's stock price climbed inSeptember.

With Air Products and Chemicals, Ackman is taking a more lowkey approach, having not spoken publicly about the stock onceeven though the hedge fund scored a major victory last week whenthe company said it would look for a new chief executive and addthree independent directors.

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