UPDATE 1-Ackman's Pershing Square Holdings fund down 19.9 pct in 2016

Tue Mar 1, 2016 7:00pm EST
 
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(Adds details on performance, portfolio holdings)

By Svea Herbst-Bayliss

BOSTON, March 1 (Reuters) - Billionaire investor William Ackman's Pershing Square Holdings has lost 19.9 percent in the first two months of 2016 as two of the hedge fund's most prominent bets moved in the wrong direction in recent days, a person familiar with the returns said on Tuesday.

Ackman, one of the industry's most widely watched investors, told clients that his Pershing Square Holdings dropped 9.8 percent in February. Losses for the first eight weeks of 2016 are now nearly as high as they were for all of 2015, when the fund lost 20.5 percent.

While the fund had a string of strong days earlier in the month, it suffered blows in recent days.

Late last week Herbalife Ltd., in which Ackman has a $1 billion bet that its shares will fall, said in a filing that it was discussing a "potential resolution" of an investigation by the Federal Trade Commission. That sent the shares surging about 27 percent on Friday.

Ackman first accused Herbalife of running a pyramid scheme in 2012, an allegation the company denies, and he has asked regulators, including the FTC, to investigate. He has said that he would make money on the bet if the share price drops to the mid-$30 range. It closed at $56.41 on Tuesday, having climbed some 17 percent in the last month.

The second blow came when Valeant Pharmaceuticals, in which Ackman has been invested for roughly a year, disclosed that the Securities and Exchange Commission is investigating the company, sending its shares tumbling on Monday. The company also canceled a planned earnings call and said its chief executive, Michael Pearson, who had been on an extended medical leave, had returned over the weekend.

The stock price has fallen 22.9 percent in the last five days.

The moves were particularly painful because Ackman runs a very concentrated portfolio and invests in only a few companies at a time.

Most fund managers are still tallying their returns and some have indicated they benefited as the stock market rebounded last month. (Reporting by Svea Herbst-Bayliss; Editing by Dan Grebler)