Bill Ackman Pershing Square Historical Performance

R

RedSun

I just did some numbers of Bill Ackman Pershing Square historical performance. Not impressed.

Pershing Square Holdings
Year YTD Return NAV $10,000
2014 40.40% $26.37 $14,040
2015 -20.50% $20.96 $11,162
2016 -13.50% $18.14 $9,655
2017 -4.00% $17.41 $9,269
2018 -0.70% $17.30 $9,204
2019 58.10% $26.94 $14,551
2020 70.20% $45.46 $24,766
2021 26.90% $57.30 $31,429
2022 -13.80% $49.36 $27,091

S&P 500 Total Return
Year YTD Return NAV $10,000
2014 13.69% $11,369
2015 1.38% $11,526
2016 11.96% $12,904
2017 21.83% $15,721
2018 -4.38% $15,033
2019 31.49% $19,767
2020 18.40% $23,404
2021 28.71% $30,123
2022 -7.01% $28,011

Had I invested $10,000 with him from 2014, I'd get about $27,091 now. But I'd get about $28,011 on S&P 500 Total Return. If I consider the meager management fee on index funds, the results are about dead even.

So why investors pay the star fund manager 2% and 20% fees?
 
RedSun said:
I just did some numbers of Bill Ackman Pershing Square historical performance. Not impressed.

Pershing Square Holdings
Year YTD Return NAV $10,000
2014 40.40% $26.37 $14,040
2015 -20.50% $20.96 $11,162
2016 -13.50% $18.14 $9,655
2017 -4.00% $17.41 $9,269
2018 -0.70% $17.30 $9,204
2019 58.10% $26.94 $14,551
2020 70.20% $45.46 $24,766
2021 26.90% $57.30 $31,429
2022 -13.80% $49.36 $27,091

S&P 500 Total Return
Year YTD Return NAV $10,000
2014 13.69% $11,369
2015 1.38% $11,526
2016 11.96% $12,904
2017 21.83% $15,721
2018 -4.38% $15,033
2019 31.49% $19,767
2020 18.40% $23,404
2021 28.71% $30,123
2022 -7.01% $28,011

Had I invested $10,000 with him from 2014, I'd get about $27,091 now. But I'd get about $28,011 on S&P 500 Total Return. If I consider the meager management fee on index funds, the results are about dead even.

So why investors pay the star fund manager 2% and 20% fees?
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Those returns are typically net of the 2 and 20. So you are still right. He got rich while you got an index return with more taxable liability. But remember that he is a value/activist investor and yet he was able to keep up with the faangs which were on a tear (of course nothing stopped him from investing in those faangs).

if you were to extend the analysis further back, you would do much better with ackman.
 
Do not know why index fund gets MORE tax liability. Should be just the opposite.

Pershing Square official track record is from 2014. I think that is far enough. People do not get to choose the start.

Hedge fund industry as a whole underperform general stock market. I think they did much poorly in 2021.
 
RedSun said:
Do not know why index fund gets MORE tax liability. Should be just the opposite.

Pershing Square official track record is from 2014. I think that is far enough. People do not get to choose the start.

Hedge fund industry as a whole underperform general stock market. I think they did much poorly in 2021.
More...

I said Ackman has more tax liability. From 2014 to now you get (index return - more taxes). Underperformance is even greater.

Over your horizon your conclusion is right. Over a different horizon a different conclusion will be made. Both are arbitrary.
 
If you exclude fees, the hedge funds really do outperform index funds. But the fees not only wipe out that outperformance, it guarantees underperformance. A few years ago, Calpers, the California Pension system withdrew all investments from hedge funds when their studies show that 70% of all profits on their investments was going to the hedge funds. The basic problem was that in the down years the hedge funds were still making 2% no matter how badly the market performed.
 
DaveV said:
If you exclude fees, the hedge funds really do outperform index funds. But the fees not only wipe out that outperformance, it guarantees underperformance. A few years ago, Calpers, the California Pension system withdrew all investments from hedge funds when their studies show that 70% of all profits on their investments was going to the hedge funds. The basic problem was that in the down years the hedge funds were still making 2% no matter how badly the market performed.
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Most longshort funds don’t show better performance in down markets which makes their underperformance in bull markets less tolerable.

One thing about ackman is that you are investing in a very smart guy with a strong investment process who takes super concentrated bets. He should be less correlated with the market than other funds. The OP’s return history shows this.
 
newwurldmn said:
I said Ackman has more tax liability. From 2014 to now you get (index return - more taxes). Underperformance is even greater.

Over your horizon your conclusion is right. Over a different horizon a different conclusion will be made. Both are arbitrary.
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It is not arbitrary. And it is not MY horizon. Pershing Square historical performance from 2014 is the official record. I did not add or cut anything.

Again, I have no time to spend more time to analyze different time horizon. Just a valid point that Pershing Square has not added any value from 2014.

As to how smart Bill Ackman is, that is the big question mark. How can anyone conclude that he is smarter than most of the other hedge fund managers. I do not believe that. He is no different from Cathie Wood. What Bill Ackman has is his publicity.

Most of the top hedge fund managers stay away from the spotlight. That does not make them less smarter.

Bill Ackman made a huge fool of himself on Herballife and Valeant Pharmaceuticals. Those are far from being any "smart".
 
DaveV said:
If you exclude fees, the hedge funds really do outperform index funds. But the fees not only wipe out that outperformance, it guarantees underperformance. A few years ago, Calpers, the California Pension system withdrew all investments from hedge funds when their studies show that 70% of all profits on their investments was going to the hedge funds. The basic problem was that in the down years the hedge funds were still making 2% no matter how badly the market performed.
More...

The justification for those large retirement and endowment funds is mainly the diversification. On other commodity and/or other strategy. But those are at huge cost in terms of fees. The other is their belief that HF managers are "smarter" and can generate even higher returns than market index even after all the fees. The latter has been proved to be not true.

But as long as we have some quick rich people and those fat retirement and endowment funds, hedge funds will continue to survive. This is all on risk taking and name recognition, not on value added to investors.
 
Most of these guys are correlated to the stock market. If they have market beating returns then its a result of concentrated beta or leverage. Of course there are other asset class hedge funds like fixed income, distressed debt, quant etc but the returns are low, like dead money post tax.
From the HF databases that I am occasionally privy to, the results are overall unimpressive and I have no idea why this industry continues to thrive.
 
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