Pershing Square Capital Management LLP is a value-based hedge fund with a concentrated portfolio of securities. On January 22, 2009, Pershing Square presented their investment results for 2008, and provided their investors with a confidential report, which we are now posting for our readers.
Pershing Square widely outperformed the S&P500 index for the year, and is now up 160% since 2004. Pershing Square is a great example of how a value-based strategy can be employed on both the long and short side of the trade with a concentrated portfolio. Pershing is known for purchasing undervalued businesses and for shorting businesses whose intrinsic value is much lower than what the market reflects. For Pershing Square, shorting is not a hedging strategy, but rather a way of creating value for their investors. Pershing’s funds hold an average of 8 to 15 holdings at a time. This allows them to focus only on their best ideas, which in turn decreases their investment risk.
The report can be downloaded here.