Bill Ackman (Trades, Portfolio)’s Pershing Square exited two holdings worth about 20% of his equity portfolio in recent months.
The firm announced Monday that it closed a position in United Technologies (UTX, Financial), which had an 11.17% portfolio weight, on June 10. He sold Automatic Data Processing Inc. (ADP, Financial), which represented 0.58% of the portfolio, on July 31. The investor also acquired a stake in an undisclosed company representing 12% of his fund’s net asset value.
Ackman’s sale of aerospace technology provider United Technologies came the day after the company announced it would merge its aerospace business with defense giant Raytheon (RT), a move he opposed. Ackman said he was “extremely concerned” about the all-stock deal, calling it “disastrous” for United Technologies’ aerospace business UTC in a letter to the company’s CEO Greg Hayes that was obtained by the Wall Street Journal.
The merger’s closing slated for the first half of 2020 would not affect the separation of its elevator business, Otis and Carrier, it said. The spin-off is part of the company’s plan to separate into three individual companies that Ackman pushed for as part of his activist investment campaign. Announced in November, the plan aims to establish United Technologies as an aerospace and defense systems supplier, Otis as an elevator manufacturer and Carrier as a provider of refrigeration and building automation products.
“We believe the upcoming business separation will serve as a catalyst for significant future share price appreciation as investors begin to value each of UTX’s businesses separately,” Ackman wrote in his first-quarter letter in May.
Ackman started the position in the first quarter of 2018 when the price averaged $131 and paid around $127 per share for his entire holding based on quarterly average prices. The stock closed the day of his sale at $128.01, putting Ackman around breakeven on the holding, GuruFocus estimates.
Ackman launched his activist position in payroll company ADP earlier, in the second quarter of 2017. He then promptly lost his bid to take three seats on the company’s board in November. Accepting the defeat, Ackman in a press release called for the board to keep its commitments to improve margins, accelerate growth and launch a new product meant to regain enterprise market share.
Ackman exited ADP the day it reported fiscal fourth-quarter results, sending the stock down 3.2% although it beat earnings estimates.
Pershing appeared to end its involvement in ADP with a solid gain. The stock traded on average around $101 in the second quarter and $107 per share in the third quarter of 2017 when Ackman accumulated the stake. He sold half of the holding in the second quarter of 2018 when the price averaged $127, and the stock closed at $166.52 the day of his exit.
The investor is enjoying a positive year with a 50.5% gross return in his hedge fund for the year through July after ending 2018 eking a 0.7% gain.
See Bill Ackman (Trades, Portfolio)'s portfolio here.
Read more here:Ă‚
Tweedy Browne Buys 2 Stocks, Adds to 3 in 2nd Quarter
Yacktman Asset Management Buys 3 Stocks in 2nd Quarter
Ken Fisher Buys 4 ETFs in the 2nd Quarter
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
