New York – Hedge fund billionaire Bill Ackman joined the list of high profile managers who reported important losses on August, as global markets rose fears over slower growth in China. Ackman, who is worth about $2.6 billion, was considered as one of the best performing hedge fund managers in 2014.
According to Reuters, Ackman’s Pershing Square Holdings portfolio dropped by 9.2%, leaving it down to 0.1% for the year. The firm had previously reported gains of 10% at the end of July this year. In 2014, the fund gained 40%, beating Standard & Poor’s 13.7% gain.
Moreover, Ackman’s Pershing Square Capital Management, which makes concentrated bets on a small number of stocks, announced on Wednesday that its Pershing Square LP fund fell 7.7% last month, meaning a 0.06% gain.
But this didn’t get Ackman by surprise. The mogul warned investors last week through a letter that falling markets would severely affect gains. The decline improved slightly when the market rebounded some last week. These situations are a clear example of how the market volatility, in this case, ignited by China’s economy crisis, can hurt even the most powerful investors.
Many other companies owned by successful investors have suffered similar effects from the market’s turmoil. For instance, the Standard & Poor’s 500 fell 6% in August ; Leon Cooperman’s Omega Advisors closed the month with a 6% loss and Dan Benton’s Andor Capital, which invests heavily in technology stocks, fell 4.5%.
Furthermore, Viking Global Investors dropped 2.1% in the past month; David Einhorn, founder of Greenlight Capital, and Daniel Loeb, founder of Third Point, said they each lost 5% in August. Barry Rosenstein’s Jana Partners fell 4.3% and Greenlight is now down 14% for the year, which is one of the industry’s most high-profile losses.
Activist investors like Ackman and Rosenstein are especially vulnerable to tumbling markets as their investments involve buying undervalued stocks and holding them while trying to persuade corporations to unlock value.
However, Ackman is still beating the US stock market, as measured by the Standard & Poor’s 500 index, for the year ending August 31.