Pershing Square Lays Off Eight Lower-Level Employees
July 01 2016 - 1:50PM
Dow Jones News
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from insiders, can't be withdrawn even if other investors flee.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)
Copyright (c) 2016 Dow Jones & Company, Inc.
Valeant Pharma (NYSE:VRX)
Historical Stock Chart
From Aug 2024 to Sep 2024
Valeant Pharma (NYSE:VRX)
Historical Stock Chart
From Sep 2023 to Sep 2024