Ackman's Pershing Square fund surges as Universal soars in stock debut (updated)

Pershing Square Holdings

22/09/2021 20:55

(Adds details on fund's performance, background on investment)
    By Svea Herbst-Bayliss
    BOSTON, Sept 22 (Reuters) - Hedge fund manager William
Ackman's 10% bet on Universal Music Group helped nearly double
returns at his own portfolio to 15.3% this week after shares in
the world's biggest music label surged in their first hours as a
publicly traded company.
    Ackman, who runs hedge fund firm Pershing Square Capital
Management, told investors that his Pershing Square Holdings
portfolio returned 15.3% after fees since January. The fund was
up 7.7% a week ago.
    The gains were largely fueled by his investment in Universal
Music Group (UMG), the label that is home to Taylor Swift, Bob
Dylan and the Beatles. Ackman pivoted a few weeks ago, buying
the sizable stake in the record label through his portfolios
after his initial plan to invest through a blank-check company
deal crumbled in July amid scrutiny from U.S. regulators.
    The billionaire investor told his investors that humans need
food, water and music, and that music, which he called the
cheapest form of entertainment in the world, is a very savvy
investment because it pays royalties.
    He raised $1.1 billion in fresh capital for the UMG stake
through a co-investment vehicle, a structure he has previously
used for investments in Automatic Data Processing  ADP.O  and
Air Products & Chemicals  APD.N . In total, Ackman's funds
invested $4 billion in UMG.
    Ackman posted a 70.2% return in 2020 following a 58.1%
return in 2019. This year the HFRX Global Hedge Fund Index,
which measures returns for the industry, is up 3.58%. 
    In the first eight months of the year Ackman's best
performing stocks included Chipotle Mexican Grill  CMG.N ,
Agilent Technologies  A.N , and Domino's Pizza  DPZ.N . He sold
Agilent to help fund his commitment to UMG.
    In its first day of trading in Amsterdam on Tuesday, UMG's
shares leapt by more than a third, pushing its market value to
$55 billion in Europe's largest listing of the year.

 (Reporting by Svea Herbst-Bayliss, Editing by Franklin Paul and
Sonya Hepinstall)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
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