Bill Ackman is touting his 10-year track record as a corporate cage rattler while defending two of his more controversial activist plays as he gears up for an IPO later this year.
Since launching Pershing Square in 2004, Ackman said his funds have an annualized rate of return to investors of 21 percent — one of the top hedge fund performances — compared with 8 percent for the benchmark S&P 500.
Ackman cited his performance in his second quarter letter to investors, in which he also made reference to the upcoming IPO of one of his funds, saying it would happen “later this year.”
The overseas vehicle would give Ackman more capital — he wants to raise at least $4 billion — that can’t be withdrawn by investors during difficult times, as happened over the past year.
Ackman also took the opportunity in the letter released Wednesday to defend his bruising battles with Herbalife and Allergan.
Ackman, who has called Herbalife a pyramid scheme, said he is prepared to extend his $1 billion short bet against the nutritional products company — in the form of put options that expire next year — if necessary.
The activist argued that not only is Herbalife’s business “deteriorating,” but there is “much greater risk of regulatory shutdown or reform along with further stock price declines,” according to the letter.
Ackman also acknowledged his recent Herbalife presentation flop, saying “in light of the hype, investors and the media came to the event perhaps expecting recordings of the CEO acknowledging that he had been running a pyramid scheme.”
In a bid to put a positive spin on it, Ackman now claims the dense, three-hour presentation was “designed for regulators,” and went on to remake his case against Herbalife’s nutrition clubs.
“As a result of our investigation, we are now able to explain and document to regulators that what Herbalife management has deemed ‘daily consumption’ at nutrition clubs, is in fact a low- income, pyramid scheme concealed within the larger pyramid scheme,” he wrote.
The investor also circled back to his latest skirmish with Allergan. The maker of Botox sued Ackman for securities fraud after he teamed with rival drug company Valeant on a takeover bid for Allergan.
“Unfortunately, in America, one can be sued by anyone for anything,” Ackman wrote.
“With respect to the law, you should know that we and Valeant are well-versed in the takeover and tender offer rules,” he added. “We have been meticulously careful in how we have constructed and implemented this investment and transaction.”
Pershing Square is in the process of lining up enough shareholders to call for a special meeting to oust most of the board of directors, which Allergan has opposed.
“Based on their scorched-earth attempts to stop or delay the meeting, Allergan’s management and board appear to already know that their shareholders do not support them,” he wrote.