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Ackman Paves Way for New Hedge Fund Management Moves

New York (HedgeCo.Net) – William Ackman, who runs hedge fund Pershing Square Capital Management, is letting clients withdraw as much of their investment as they please.  A vast change from the dozens of hedge funds who rushed to halt redemptions, Ackman is personally stepping up to the plate, apologizing profusely for one of his fund’s performance and allowing investors to reclaim their cash.

Pershing Square IV, the fund started by Ackman two years ago, was supposed to reap returns by betting that the stock of Target Corporation would rise sharply.  Instead, share prices at the discount retailer have done just the opposite, causing the fund to plunge 90 percent this year.

Ackman sent a letter to investors, describing his fund as “one of the greatest disappointments of my career to date.”  He also personally threw in $25 million to help pay back frustrated investors.  For those who wish to withdrawal what is left of their investment, they will be paid in March.  For clients who invest in his other hedge funds, Ackman has declared that he will not charge a performance fee until the current losses are recouped.  

While Ackman’s actions are no doubt admirable, many hedge funds are choosing to go the other route; forcing investors to stay locked in until unfavorable market conditions pass.  Hedge funds like RAB Capital, Citadel and Fortress have all imposed restrictions on withdrawals following losses.  Some are hoping that Ackman’s moves will start a new trend; one where investors can rightfully take what’s there’s, in addition to taking the fall for disappointing investments by forgoing their standard fees.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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