William Ackman's Pershing Square Capital Management LP, which has been battered this year by a slumping portfolio, laid off eight lower-level employees this week, according to people familiar with the matter.

The cuts, which largely involve back-office employees in technology and investor services, amount to more than 10% of the activist hedge fund's staff, the people said.

Mr. Ackman told his staff this week that the moves have nothing to do with the poor performance of the hedge fund, the people said. Instead, he said, the firm has gotten better in technology and automating tasks like filling out new-investor forms, reducing the need for employees. He added that he doesn't anticipate any other big cuts, the people said.

The New York firm is in the spotlight as an investment in Valeant Pharmaceuticals International Inc. has blown a hole in its portfolio. The drug company's stock has dropped more than 90% since last August amid questions about its accounting and business model, and Mr. Ackman has blamed it for dragging down other stocks the investment firm owns.

Pershing Square's publicly traded fund lost 21% this year through June 21, according to a disclosure. That drop follows a similar loss last year for the fund, which is viewed as a proxy for the private investment funds that make up the bulk of Pershing Square's capital.

At the end of May, Pershing Square had $12.3 billion in assets, down from $20.2 billion at the end of July 2015, just before Valeant's stock started falling.

For hedge funds, investment performance generally is correlated with pay at the senior level. Pershing Square is far below its so-called high-water mark, which it would need to get back to before such employees would receive much of their pay.

Mr. Ackman has told investors he made mistakes and publicly expressed regret over Valeant, but also argued the stock will rebound. In March he took a Valeant board seat and is seeking to turn the stock around.

It isn't clear if the slumping performance will lead to meaningful redemptions from Pershing Square's funds.

The firm's publicly traded fund, along with the personal assets from insiders, can't be withdrawn even if other investors flee. Most outside investors can withdraw their funds in only 1/8th increments a quarter.

Turnover at Pershing Square is typically low, though this year two top employees and friends of Mr. Ackman have departed. Paul Hilal, a partner and Mr. Ackman's college roommate, left to start his own venture. Then in May, William Doyle, a business-school classmate of Mr. Ackman's and the man who introduced him to Valeant, left the firm.

Write to David Benoit at david.benoit@wsj.com

(END) Dow Jones Newswires

July 01, 2016 13:35 ET (17:35 GMT)