Ackman’s Hedge Fund: Highs and Lows in a Turbulent Year

The renowned hedge fund manager Bill Ackman, often making headlines with his aggressive investment strategy and criticism of supposedly questionable stocks, is currently facing a setback in his main fund, Pershing Square Holdings. While Ackman accumulated a fortune of over $9 billion and pursued plans for a $25 billion fund, he recently had to withdraw these plans—a significant blow for the billionaire investor. In July, Pershing Square's hedge fund recorded a 4.7% loss, shrinking the annual gain to a meager 0.7%, a drastic decline from the peak of 8.7% in mid-July. By contrast, the S&P 500 rose by an impressive 15.8% by the end of July. The fund's shares, traded in Amsterdam and London, even fell into the negative on Friday. The recent setback was not caused by a misinvestment in the hype around Nvidia but by a drastically disappointing performance from Universal Music, a Dutch company that was severely hit in the second quarter. Universal Music's shares, the world's largest music company featuring artists like Taylor Swift and Bob Dylan, plummeted by 23.5% to 21.7 euros after a disappointing announcement on July 25 and ended the week at 21.44 euros, representing a 24.5% drop within eight days. Universal Music finally admitted growing skepticism about the growth of new streaming subscriptions, which shocked investors and led to massive stock sell-offs. This presents a significant challenge for Ackman, not least because his hedge fund typically invests in only a limited number of so-called "high-quality companies" and holds these positions for six years or longer. The fund primarily invests in North American stocks and is one of the more exclusive investment vehicles, accessible only to accredited investors. Investors are expected to commit their capital for at least five years, as early withdrawals are subject to penalties. Despite volatile years, such as the loss year of 2015 with -20.5%, the fund has also achieved remarkable gains in the past, such as a 70% return in 2020.