Billionaire activist Bill Ackman is expected to roll out the performance update for his hedge fund Pershing Square Thursday and it doesn't look like it will be a pretty picture.
Pershing Square has so far posted losses of 18% for 2016, before accounting for fees, according to its most recent performance update last month. The culprit behind much of the damage is the same stock that pulled Pershing into the territory of a 19.3% loss in 2015: Valeant Pharmaceuticals (VRX).
And the debt-laden Canadian drugmaker, whose shares are down 29% so far on the month, is likely to be the primary driver for another disappointing month at Pershing again.
Ackman boosted his stake in Valeant to 19.5 million shares last March, representing a 5.7% stake in the company for an average price of $196 a share. (Valeant shares closed at $20.27 in Wednesday trading.)
The primary drivers for Valeant's steep decline has been SEC and Congressional probes into Valeant's revenue bookkeeping tied to a former partnership with mail-order pharmacy Philidor. The drugmaker has also been hit by allegations of hiking drug prices, which culminated in a Senate special-committee hearing last month and the replacement of Valeant's CEO and several board members -- a reshuffle that included the induction of Ackman himself to the board, as well as Pershing's Vice Chairman Stephen Fraidin.
Pershing's other top underperformers on the month have been frozen-food giant Nomad Foods (NOMD), in which Pershing has disclosed an 18% stake. Shares of Nomad have fallen by roughly 18% so far in June, followed by a more than 5% decline of Pershing holding Platform Specialty Products and a 3% decline at Mondelez (MDLZ). Meanwhile, Pershing holdings Canadian Pacific Railway (C) and Air Products & Chemicals (APD) each dropped more than 2% vs. a 1% decline in the broader S&P 500.
One of the few bright spots on the portfolio include a 4% gain in Dallas-based real estate developer Howard Hughes (HHC), while most of the remaining disclosed positions traded fairly evenly on the month, including Ackman's short position in nutrition-products distributor Herbalife (HLF), in which Pershing disclosed its $1 billion short stake in December 2012.
