That was fast.
Less than two weeks after disclosing that he'd added to his position in Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) during Q1 2020, renowned investor Bill Ackman's Pershing Square Capital Management announced it had sold off its entire stake in even-more-renowned investor Warren Buffett's company.
In a conference call on Wednesday, May 27, Pershing revealed that it had dumped not only Berkshire, but also Blackstone Group (NYSE:BX) and Hilton Worldwide spinoff Park Hotels & Resorts (NYSE:PK). The latter company's shares have crashed nearly 60% year-to-date due to the coronavirus-related travel slump.
At a loss
Ackman first acquired Berkshire shares about a year ago, sinking about $685 million into a purchase of 3.5 million shares. His sense at the time was that Berkshire was being undervalued by the market.
He almost certainly sold his stake at a loss. Berkshire's shares are down 8.5% over the past 12 months, and down 18.6% year-to-date. Conversely, Ackman's overall portfolio is outperforming the market. According to Pershing Square's website, its year-to-date returns were 21.1% as of May 19.
Pershing Square indicated that it was hoping to deploy capital into higher-growth opportunities than Berkshire Hathaway's slow-and-steady pace. Buffett has faced criticism from some on Wall Street for amassing a $133.3 billion hoard of cash and short-term treasury bonds instead of deploying those assets into higher-return investments.
Long term value
On the conference call, Pershing Square noted that the sale shouldn't be seen as a bet against Buffett. "We continue to think Berkshire will be a strong investment over the longer term," said Ryan Israel, one of Pershing Square's partners, "but we also think the current environment means there may be more than typical opportunities for us to see very high-returning investments."