Pershing Square Holdings, Ltd. Public Class USD Accum.Shs · LSE:PSH
Pershing Square Holdings, Ltd. Public Class USD Accum.Shs — Pershing Square Holdings — Investor Presentation (January 2015)
81 slides from Pershing Square Holdings, Ltd. Public Class USD Accum.Shs's investor presentation, Jan 29, 2015
Slide 1: Annual Update Presentation
Annual Update Presentation January 29, 2015 Pershing Square Capital Management, L.P.
Slide 2: Disclaimer
Disclaimer All information provided herein is for informational purposes only and should not be deemed as a recommendation to buy or sell any security mentioned. Pershing Square Capital Management, L.P. (“Pershing Square”) believes this presentation contains a balanced presentation of the performanc
Slide 3: Table of Contents
Table of Contents 2014 Fund Performance Pershing Square Holdings, Ltd. IPO Portfolio Update Business & Organizational Update 3
Slide 4: 2014 Fund Performance Review
2014 Fund Performance Review
Slide 5: Pershing Square Holdings, Ltd. Performance
Pershing Square Holdings, Ltd. Performance 2014 Net Returns 40.4% S&P 500 13.7% 2013 Net Returns 9.6% S&P 500 32.4% Past performance is not necessarily indicative of future results. All investments involve the possibility of profit and the risk of loss, including the loss of principal. Please see th
Slide 6: Cumulative Net Returns Since Inception (January 1, 2004)
Cumulative Net Returns Since Inception (January 1, 2004) Pershing Square, L.P. Net Returns vs. Indexes through December 31, 2014 700.00% Pershing Square, L.P.: 650.00% 696.2% 600.00% 550.00% 500.00% 450.00% 400.00% 350.00% 300.00% 250.00% 200.00% 150.00% S&P 500: 132.1% 100.00% 50.00% 0.00% -50.00%
Slide 7: Performance in Up & Down Markets
Performance in Up & Down Markets Pershing Square, L.P. Net Returns vs. S&P 500 (1/1/2004 through 12/31/2014) Average Monthly Return Average Return in Up Months Average Return in Down Months 2.0% 2.9% 2.9% 0.0% 1.7% 3.0% -1.0% (0.8%) 1.5% 2.0% -2.0% 1.0% 0.7% -3.0% 0.5% 1.0% -4.0% (3.6%) 0.0% -5.0% 0
Slide 8: 2014 Winners and Losers (gross returns)
2014 Winners and Losers (gross returns) Winners PSH Losers PSH Allergan Inc 19.1% Fannie Mae (0.6%) Canadian Pacific Railway 7.0% Proctor & Gamble (0.5%) Herbalife (short) 6.1% Freddie Mac (0.2%) Restaurant Brands International 5.5% 5 Other Positions (1.2%) Air Products & Chemicals Inc 5.1% Beam Inc
Slide 9: Long and Short Attribution (gross returns)
Long and Short Attribution (gross returns) Pershing Square, L.P. Long Short 2004 61.6% (5.9%) 2005 53.7% (1.6%) 2006 36.9% (6.9%) 2007 (5.6%) 34.9% 2008 (23.2%) 11.6% 2009 60.5% (11.4%) 2010 43.8% (4.7%) 2011 2.5% (2.1%) 2012 16.9% 1.1% 2013 25.8% (12.0%) 2014 42.4% 5.8% 2011, 2012, 2013, and 2014 s
Slide 10: Total Assets Under Management
Total Assets Under Management $ in millions 12/31/2014 AUM Pershing Square, L.P. $5,315 Pershing Square International, Ltd. $5,757 Pershing Square Holdings, Ltd. $6,560 Pershing Square II, L.P. $113 Pershing Square V Funds (Air Products) $541 Total Core Fund AUM $17,746 Total Firm AUM $18,287 Assets
Slide 11: Cash / US Treasury Funds Are the Default Investment
Cash / US Treasury Funds Are the Default Investment On average, free cash1 has historically averaged ~14% of our fund AUM Pershing Square, L.P. Quarterly Cash & Equivalents as a % of NAV 50.0% 40.0% 30.0% Average 20.0% 13.6% 10.0% 0.0% -10.0% Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 D
Slide 12: Pershing Square Holdings, Ltd. IPO
Pershing Square Holdings, Ltd. IPO
Slide 13: Pershing Square Holdings, Ltd.
Pershing Square Holdings, Ltd. On December 31, 2012, we launched a new private fund, Pershing Square Holdings, Ltd. (“PSH”) PSH launched with approximately $2.2B on December 31, 2012 Private fund NAV prior to IPO on September 30, 2014 had grown to $3.1B largely through capital appreciation An additi
Slide 14: Pershing Square's Rationale for PSH
Pershing Square’s Rationale for PSH The stability of PSH’s capital enhances Pershing Square’s ability to successfully execute its investment strategy Reduces the need to manage cash for potential redemptions Allows for increased percentage of capital to be invested in core strategy Expands Per
Slide 15: PSH – IPO Summary
PSH – IPO Summary Goals Results Exceed $3B in NAV pre-IPO Reached $3.1B pre-IPO Minimum IPO size of $1B Raised ~$2.8B at IPO IPO within 4 years of initial private IPO on 10/1/14, 21 months after launch phase launch Significant scale to achieve liquidity PSH total assets as of 12/31/14 $6.6B
Slide 16: PSH – Structure at Listing
PSH – Structure at Listing PSH Private Phase / Rollover Private Phase Initial Public Offering $3.0bn NAV conversion Cornerstone and Public Raise during IPO $2.8bn PS International Rollover $212.5mm Pershing Square Holdings, Ltd. $6.2bn NAV Management Management Private Phase Investor IPO Purchases (
Slide 17: PSH – Offering Characteristics
PSH – Offering Characteristics New vs. Existing Investors IPO Buyers by Type IPO Buyers by Region
Slide 18: Liquidity Profile – Capital by Share Class
Liquidity Profile – Capital by Share Class Permanent Capital Now Represents >1/3 of our Investor Base 12/31/2014 One Year Capital 2.4% Two Year Capital 13.7% 1/3 per Year Capital 3.2% 1/8 per Quarter Capital 34.6% Permanent Capital 36.2% GP and Affiliates 10.0% 1 46% Permanent Capital Including GP a
Slide 19: Liquidity Profile – Impact of PSH
Liquidity Profile – Impact of PSH Permanent capital significantly reduces percent of AUM available for redemption % of Private Funds % of Total AUM Date Redeemable Redeemable 12/31/14 15.40% 9.21% 3/31/15 15.41% 9.22% 6/30/15 12.22% 7.31% 9/30/15 13.63% 8.16% Total 56.7% 33.9% 40% reduction 19
Slide 20: Current Portfolio Highlights
Current Portfolio Highlights
Slide 21: 2014 Highlights
2014 Highlights 2014 was a year marked by strong returns continued value creation by our portfolio companies which we expect to be further enhanced by permanent capital Beam acquired by Suntory for $16bn Exited General Growth Properties Initiated investment in and facilitated sale of AGN Reg
Slide 22: Allergan logo divider
Slide 23: Allergan Inc.
Allergan Inc. At investment inception, ~$37bn market cap specialty pharmaceutical company Leader in aesthetics, dermatology, and ophthalmology In February 2014, Pershing Square formed JV with Valeant to assist in Allergan merger Between February 25th and April 21st, Pershing Square acquired
Slide 24: Allergan Investment Thesis
Allergan Investment Thesis Strategic rationale of a Valeant/Allergan merger Allergan has a strong track record of organic growth driven by a portfolio of market leading products, including the fast-growing Botox franchise Allergan has a poor track record of capital allocation and cost management
Slide 25: Structure of the Transaction
Structure of the Transaction Pershing Square and Valeant formed a co-bidder entity The co-bidder entity was formed with the intent to Make an investment in Allergan Assist Valeant in consummating a merger between Valeant and Allergan Valeant invested the HSR limit of $75.9mm and Pershing S
Slide 26: Allergan's Response to the Unsolicited Offer
Allergan’s Response to the Unsolicited Offer Despite a large premium offer, the Allergan board’s response was hostile and anti-shareholder Threats to engage in preclusive transactions Refusal to engage with all bidders Attacks against Valeant’s business Obstruction of Special Meeting and s
Slide 27: Allergan: Share Price Performance
Allergan: Share Price Performance Allergan stock increased 80% including dividends from inception of our position to date, or 71% including dividends from inception to YE 2014 Stock price performance of Allergan from 2/25/2014 to 1/23/2015 8/22/14: Allergan shareholders deliver $224 requisite 25% sh
Slide 28: Herbalife logo divider
Slide 29: Herbalife: It's a Pyramid Scheme
Herbalife: It’s a Pyramid Scheme All facts continue to confirm that Herbalife is a pyramid scheme Video obtained of a meeting of corporate executives and top distributors discussing ‘a level of inauthenticity’ in the business Current Chairman’s Club member Stephan Gratziani: “Who wants to bring
Slide 30: Herbalife: Timeline of Events
Herbalife: Timeline of Events HLF shares appreciated by 143% including dividends in 2013… Stock price performance of HLF from 1/1/2013 to 12/31/2013 11/20/13: Stiritz $85 10/28/13: HLF converts to 1/9/13: Third reports 3Q13 13D filer 7/31/13: Soros Point discloses 2/14/13: Icahn earnings $79 $75 rev
Slide 31: Herbalife: Timeline of Events (cont.)
Herbalife: Timeline of Events (cont.) From its high of $82 in January 2014, Herbalife’s stock price declined 52% in 2014 due to, among other things, regulatory investigations, public scrutiny, deterioration of the business and earnings Stock price performance of HLF from 1/1/2014 to 12/31/2014 $85 1
Slide 32: Herbalife: Performance Since Short Inception
Herbalife: Performance Since Short Inception From the inception of our short position on May 1, 2012, HLF stock has declined by 41% including dividends Stock price performance of HLF from 5/1/2012 to 1/23/2015 $85 $75 Stock price $65 $55 $45 $35 $31 $25 5/1/2012 8/1/2012 11/1/2012 2/1/2013 5/1/2013
Slide 33: Operating Performance has Turned the Corner
Operating Performance has Turned the Corner Organic operating performance has begun to deteriorate led by Herbalife’s most mature markets Q3 Volume Points YoY Growth Comparison (%) Worldwide Volume Points YoY Growth Over Time (%) Q3 14% 13% 13% 2013A 2014A ∆ 12% 10% 9% YoY Volume Points Growth (%) N
Slide 34: Herbalife: Running Out of Options
Herbalife: Running Out of Options HLF took on substantial leverage in 2014 to fuel an aggressive buyback program and bolster a falling share price. With an $1B credit facility maturing in March 2016, Herbalife is running out of options Enterprise Value Decline $9,000 $8,000 $7,000 $6,000 $5,000 $4,0
Slide 35: Air Products logo divider
Slide 36: Air Products (APD): Investment Thesis
Air Products (“APD”): Investment Thesis High-quality, simple, predictable, free-cash-flow generative business Global oligopoly enjoys attractive returns due to local incumbency advantages driven by the high transportation costs of the product Stability: diversified, contracted, buffered from m
Slide 37: APD has a New CEO with a Great Track Record
APD has a New CEO with a Great Track Record In June, Air Products appointed a new CEO, Seifi Ghasemi, who has a great track record of creating shareholder value Two decades as senior leader of industrial gas company BOC Last decade leading Rockwood, a specialty chemicals business o ROC TSR = 3
Slide 38: APD is Beginning a Significant Transformation
APD is Beginning a Significant Transformation APD has announced a plan to improve performance to industry- best levels Seifi’s plan to improve performance rests on five core principles: 1) Focus on the core 4) Control capital / costs 2) Restructure the organization 5) Align rewards 3) Change the c
Slide 39: APD: Share Price Performance in 2014
APD: Share Price Performance in 2014 APD’s share price increased 32% including dividends in 2014 Stock price performance of APD from 1/1/2014 to 12/31/2014 150 9/26/13: APD announces major company restructuring and “best $144 in industry” goal 140 Share price 130 10/30/14: APD 7/23/14: Seifi hosts a
Slide 40: APD: Share Price Performance Since Inception
APD: Share Price Performance Since Inception APD’s share price increased by 57% including dividends since inception of our initial investment Stock price performance of APD from 5/22/2013 to 1/23/2015 150 9/26/13: APD announces major company restructuring and “best in industry” goal $143 140 9/26/13
Slide 41: Canadian Pacific
Canadian Pacific
Slide 42: CP: Remarkable Transformation Continues
CP: Remarkable Transformation Continues 2014 results highlight continued rapid pace of transformation under Hunter Harrison and the reconstituted CP Board Annual earnings per share growth of 32% despite record winter conditions in Q1 and lingering industry-wide congestion Operating Ratio of 64
Slide 43: We Believe CP Remains an Attractive Investment
We Believe CP Remains an Attractive Investment Continued operational excellence is enhancing service and reliability while lowering CP’s cost to serve, which is driving an acceleration of revenue growth and a robust long-term outlook Transformation will remain rapid in 2015, with 2015 guidance of
Slide 44: CP: Share Price Performance in 2014
CP: Share Price Performance in 2014 CP’s share price increased 40% including dividends in 2014 Stock price performance of CP from 1/1/2014 to 12/31/2014 (CAD) 260 260 10/2/14: Analyst Day details new four-year targets: 10.5% revenue CAGR 240 240 Operating ratio of 58-63% EPS of $17, before fur
Slide 45: CP: Share Price Performance Since Inception
CP: Share Price Performance Since Inception CP’s share price increased 384% including dividends since inception of our investment Stock price performance of CP from 9/22/2011 to 1/23/2015 (CAD) 260 10/2/14: Analyst Day details new four-year targets: 10.5% revenue CAGR 240 Operating ratio of 58-6
Slide 46: Restaurant Brands International
Restaurant Brands International
Slide 47: Restaurant Brands International (Burger King)
Restaurant Brands International (Burger King) Leading global fast-food brands with a franchise-focused model 18,000+ fast-food units under Burger King and Tim Hortons brands Significant unit growth opportunity requires little capital Transformational acquisition of Tim Hortons in December 2014
Slide 48: QSR/BKW: Share Price Performance in 2014
QSR/BKW: Share Price Performance in 2014 Restaurant Brands International’s share price increased 72% including dividends in 2014 Stock price performance of QSR/BKW from 1/1/2014 to 12/31/2014 $45 $39 8/26/14: Burger King $40 announces acquisition of 8/24/14: Burger King and Tim Hortons Share price $
Slide 49: QSR/BKW: Share Price Performance Since Inception
QSR/BKW: Share Price Performance Since Inception Restaurant Brands International’s share price increased 175% including dividends since it merged with Justice Holdings Stock price performance of QSR/BKW from 6/19/2012 to 1/23/2015 $45 $39 $40 $35 Share price $30 $25 $20 $15 $10 Note: The performance
Slide 50: Platform Specialty Products logo divider
Slide 51: Platform Specialty Products Corporation
Platform Specialty Products Corporation Platform of “asset-light, high-touch” specialty chemicals businesses “Asset-light, high-touch” = high margins and switching costs, low capital intensity Experienced management team with demonstrated record of value creation Rich opportunity set for futur
Slide 52: Platform: Share Price Performance in 2014
Platform: Share Price Performance in 2014 In 2014, Platform’s share price increased by 69% including the attached warrants associated with the IPO Stock price performance of Platform from 1/1/2014 to 12/31/2014 8/20/14: Platform announces acquisition of $30 4/17/14: Platform Arysta LifeScience annou
Slide 53: Platform: Share Price Performance Since Inception
Platform: Share Price Performance Since Inception Since the IPO on the London Stock Exchange in May 2013, Platform’s share price has increased 144%, including the attached warrants associated with the offering Stock price performance of Platform from 5/16/2013 to 1/23/2015 $30 $25 $22 Share price $2
Slide 54: Zoetis logo divider
Slide 55: Zoetis Inc.
Zoetis Inc. ~$4.7bn 2014e revenue, largest manufacturer of medication for pets and livestock in the world ~$22bn equity market capitalization Split-off from Pfizer June 2013 Pershing Square began buying Zoetis shares on July 22nd 2014 and owns a 8.5% stake in the company Passes Pershing Sq
Slide 56: Zoetis: Share Price Performance
Zoetis: Share Price Performance Zoetis stock increased 35% including dividends from inception of our position to date, and increased 31% including dividends from inception to YE 2014 Stock price performance Zoetis from 7/22/2014 to 1/23/2015 $50 7/22/14: Pershing $45 Square purchases first ~$44 Zoet
Slide 57: Howard Hughes logo divider
Slide 58: Howard Hughes Corporation
Howard Hughes Corporation HHC was created by Pershing Square Formed so that certain GGP assets, whose full value would not be realized in a REIT, could receive recognition in the public markets and appropriate management attention Comprised of development assets, master planned communities, an
Slide 59: HHC: Share Price Performance in 2014
HHC: Share Price Performance in 2014 The Howard Hughes Corporation’s share price increased 9% in 2014 Stock price performance of HHC from 1/1/2014 to 12/31/2014 $180 $170 $160 Share price $150 $140 $130 $130 $120 $110 $100 Note: The performance of HHC’s share price is provided for illustrative purpo
Slide 60: HHC: Share Price Performance Since Inception
HHC: Share Price Performance Since Inception Since the spinoff from GGP in November 2010, The Howard Hughes Corporation’s share price has increased 219% Stock price performance of HHC from 11/5/2010 to 1/23/2015 $180 $160 $140 Share price $120 $100 $121 $80 $60 $40 $20 $0 Note: The performance of HH
Slide 61: Freddie Mac and Fannie Mae logo divider
Slide 62: Fannie Mae & Freddie Mac (GSEs)
Fannie Mae & Freddie Mac (GSEs) The GSEs are vital to the U.S. mortgage market and there is no other credible alternative to replace them In 2013, the Government began stripping all profits from the GSEs and sending them to Treasury every quarter, in perpetuity The net worth sweep is an unlawf
Slide 63: Fannie and Freddie: Share Price Performance in 2014
Fannie and Freddie: Share Price Performance in 2014 Fannie Mae and Freddie Mac share prices declined 32% and 29%, respectively, in 2014 Stock price performance of Fannie and Freddie from 1/1/2014 to 12/31/2014 $7.00 $6.00 9/30/14: US District Court dismisses shareholder Share price $5.00 lawsuit see
Slide 64: Fannie and Freddie: Share Price Performance Since Inception
Fannie and Freddie: Share Price Performance Since Inception Since we began accumulating our positions in October 2013, Fannie Mae and Freddie Mac share prices have increased 46% and 52%, respectively Stock price performance of Fannie and Freddie from 10/4/2013 to 1/23/2015 $6.00 $5.50 $5.00 $4.50 Sh
Slide 65: Exited Positions
Exited Positions
Slide 66: Positions Exited in 2014
Positions Exited in 2014 Jdzeamn CO Peo 66
Slide 67: Beam: Share Price Performance in 2014
Beam: Share Price Performance in 2014 Beam’s share price increased by 23% including dividends from the beginning of 2014 to the closing date of Beam’s acquisition by Suntory Stock price performance of Beam from 12/31/2013 to 5/1/2014(1) $85 $83.50 $83 $81 $79 1/13/14: Suntory agrees to acquire BEAM
Slide 68: Beam: Share Price Performance Since Spin-Off
Beam: Share Price Performance Since Spin-Off Beam’s share price increased by 104% including dividends from the date FBHS was spun off from Fortune Brands until the day Beam was acquired Stock price performance of Beam from 10/3/2011 to 5/1/2014(1) $85 $83.50 1/13/14: Suntory $80 agrees to acquire BE
Slide 69: P&G: Share Price Performance for 2014
P&G: Share Price Performance for 2014 P&G’s share price declined by 1%, including dividends, from the beginning of 2014 to the date we exited the position Stock price performance of P&G from 12/31/2013 to 6/25/2014 $90 $85 $79 Stock price $80 $75 $70 $65 Note: The performance of P&G’s share price is
Slide 70: P&G: Share Price Performance Since Inception
P&G: Share Price Performance Since Inception P&G’s share price increased by 30% including dividends from inception of our initial investment to exit Stock price performance of P&G from 5/4/2012 to 6/25/2014 $90 $85 $80 $79 Stock price $75 $70 $65 $60 $55 Note: The performance of P&G’s share price is
Slide 71: GGP: Share Price Performance in 2014
GGP: Share Price Performance in 2014 GGP’s share price was flat, including dividends, from the beginning of 2014 to the date we exited the position Stock price performance of GGP from 12/31/2013 to 2/4/2014 $25 $24 $23 $22 Stock price $21 $20 $20 $19 $18 $17 $16 $15 Note: The performance of GGP’s sh
Slide 72: GGP: Total Shareholder Returns
GGP: Total Shareholder Returns On the date of Pershing Square’s exit, GGP, including a shareholder’s interest in the Howard Hughes and Rouse spinoffs, traded at more than 100 times the price at which we first began accumulating our position in November 2008 $40 GGP (incl. dividends) ~$35 $35 Howard
Slide 73: Business & Organizational Update
Business & Organizational Update
Slide 74: Organizational Update
Organizational Update \Vice Chairman Steve Fraidin a ees William Ackman CEO & Portfolio Manager SHAREHOLDER SERVICES n Ryan Belden Ishareholder Services Associate Projact Manager Nelina Knol Administrative Assistant PUBLIC RELATIONS LEGAL& COMPLIANCE TRADING INVESTMENT TEAM FINANCE INVESTOR RELATION
Slide 75: Personnel Additions in 2014
Personnel Additions in 2014 Investment Team Joined Pershing Square in September 2013 as a Consultant and as William Doyle Investment Team member in October 2014 WFD Ventures, LLC Johnson & Johnson McKinsey & Company M.B.A., Harvard Business School S.B., Massachusetts Institute of Technology Joined P
Slide 76: Personnel Additions in 2014 (continued)
Personnel Additions in 2014 (continued) Investor Relations Vice President Louis Kahl Joined Pershing Square in June 2014 Hewitt EnnisKnupp Inc. Cliffwater LLC Pfizer Inc. M.B.A., Penn State University B.A., Villanova University C.F.A. Vice President Roman Velikson Joined Pershing Square in June 2014
Slide 77: Personnel Additions in 2014 (continued)
Personnel Additions in 2014 (continued) Public Relations Director of Communications John Pinette Joined Pershing Square in August 2014 Gates Family Office Google Microsoft J.C.L., Gregorian University (Rome) M.A., University of Louvain (Belgium) B.A., St. Thomas College Finance and Accounting Michae
Slide 78: Personnel Additions in 2014 (continued)
Personnel Additions in 2014 (continued) Shareholder Services Shareholder Services Associate Ryan Belden Joined Pershing Square in October 2014 SS&C Technologies Inc. HSBC Bank, N.A. The Reserve (formerly The Reserve Funds) Citigroup B.S., University of Maine Technology Technology Support Representat
Slide 79: Personnel Updates in 2015
Personnel Updates in 2015 Legal & Compliance Additions Vice Chairman Stephen Fraidin Joining Pershing Square in February 2015 Kirkland & Ellis LLP LL.B., Yale Law School A.B., Tufts University Senior Counsel Jenna Dabbs Joining Pershing Square in January 2015 United States Attorney’s Office, Souther
Slide 80: Additional Disclaimers and Notes to Performance Results
Additional Disclaimers and Notes to Performance Results Presentation of Performance Results and Other Data The performance results of PSH and Pershing Square, L.P., the Pershing Square fund with the longest performance track record, included in this presentation are presented on a gross and net-of-f
Slide 81: Additional Disclaimers and Notes to Performance Results
Additional Disclaimers and Notes to Performance Results Risk Factors Investors in PSH may lose all, or substantially all, of their investment in PSH. Any person acquiring shares in PSH must be able to bear the risks involved. These include, among other things, the following: • PSH is exposed to a co
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