Yesterday morning, after the biggest ever crash in Valeant stock, we showed that “When Ackman Gets A Valeant Margin Call Today, This Is What He Will Be Selling” and laid out his top (and only) concentrated holdings as follows:

 

We didn’t have long to wait for the liquidity-sapping margin calls to come in and to force Ackman, whose positions are so concentrated he can only unload them via block sales, to proceed with liquidation.

Moments ago Pershing Square Holdings, released an email to investors regarding the resizing of its investment in Mondelez International. The text of the email is set forth below:

Dear Pershing Square Investor:

After the close, we completed a block sale of 20 million shares of Mondelez International. As a result of the sale, we now own a 5.6% stake in the company, are the third largest owner, and have substantial uninvested cash. We reduced our stake because Mondelez had become an outsized position in light of its initially large size and its outperformance relative to other holdings. We continue to believe in the potential for operating improvements and margin expansion that we expect will lead to substantial further increases in value. As a result, it remains our largest exposure. We are reducing the position size for portfolio management purposes only. 

We have carefully reviewed the balance of our holdings and have concluded that they are appropriately sized. As such, we have no current plans to sell any of our other investments. 

Please call the investor relations team or me if you have questions about the above. 

Sincerely, 

Bill   

One can ignore Ackman’s “explanation” for why he is selling: the bottom line is he is forced to liquidate to shore up cash, whether due to margin calls, or just because the long overdue redemption letters have started coming as furious LPs finally demand their money back.

And if they haven’t yet, they will, because in the letter Ackman also disclosed that the weekly Pershing Square Holdings NAV per share as of close of business on 15 March 2016 was USD15.42. This is down 26.4% from the 20.96% as of December 31, and means that in 10 weeks, more than a quarter of Ackman’s AUM has vaporized.

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