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New York Times – In a move that could force similar changes at other money-losing hedge funds, the well-known fund manager William A. Ackman is cutting his fees and allowing investors to take what is left of their money from one of the funds he manages.
Mr. Ackman, who runs Pershing Square Capital Management, is suffering huge losses on a fund he started nearly two years ago to bet solely on the rise of the stock of the discount retailer Target Corporation.
The fund, called Pershing Square IV, is down nearly 90 percent this year, and Mr. Ackman has been feeling pressure from investors who want to take their money out. In an effort to mollify those investors, Mr. Ackman apologized for the losses in a letter sent on Sunday. He personally committed $25 million to the fund to help pay investors.
TheStreet.com – Two contemporaries rushed to the defense of hedge fund manager Ezra Merkin, who is reportedly being investigated by New York Attorney General Andrew Cuomo after his investors lost billions of dollars linked to disgraced money manager Bernard Madoff.
William Ackman, who manages Pershing Square Capital, and Michael Steinhardt of Steinhardt, Fine, Berkowitz & Co. both called Merkin, a partner at hedge funds Cerberus Capital, Gabriel Capital and Ascott Partners, an "honest" man at a panel discussion of Madoff Thursday night at the Yivo Institute for Jewish Research.
"I’ve known him for 15 years," Ackman said. "I think he’s an honest person, an intelligent person, an interesting person, a smart investor. People don’t want to hear that because if you invested with Ascot you lost all your money."
Bloomberg – William Ackman’s hedge fund that invests in Target Corp. fell 68 percent last year, more than double the loss by the second-largest U.S. discount chain.
Pershing Square IV declined 7.7 percent in December alone, according to a letter to investors from Pershing Square Capital Management LP. Ackman and Pershing spent about $2 billion in 2007 for a stake in Minneapolis-based Target. Ackman has since pressed Target to buy back shares, sell its credit-card unit and extract more value from its real estate.
Ackman, who controls 9.5 percent of Target, proposed last year that the company place the land under Target stores into a real estate investment trust that would lease the property back to the retailer. The New York-based investor has argued that such a move would free up cash for the company and result in a higher valuation.
Pershing Square IV’s loss last year followed a decline of 43 percent in 2007. The fund is structured so its returns to investors double the stock’s movement.
