May 6, 2016 / 9:22 PM / 2 years ago

New Mexico public employees to exit Ackman's Pershing Square

NEW YORK, May 6 (Reuters) - New Mexico’s public employees are taking their final chunk of money out of billionaire investor William Ackman’s hedge fund Pershing Square Capital Management, the pension fund’s chief investment officer said on Friday.

The $14 billion pension is asking the $12 billion hedge fund to return $13 million, the last remaining bit of a once larger investment, Jonathan Grabel, chief investment officer for the Public Employees Retirement Association of New Mexico told Reuters in a telephone interview.

Pershing Square was a top industry performer in 2014, when it delivered a 40 percent return. But more recently it has been close to the bottom, losing 20 percent last year.

Through April its Pershing Square International fund has lost nearly 15 percent while the average hedge fund is up 0.8 percent, according to eVestment. As one of the industry’s biggest activist hedge funds with bets on Canadian Pacific Railway Ltd, Mondelez International Inc and Valeant Pharmaceuticals International Inc, it features prominently in many pension funds.

But Pershing Square locks its investors’ money up for a long time — it takes them two full years to exit completely — and so Grabel said his pension fund had to move now or risk being stuck for a while longer.

“We didn’t have a meaningful allocation anymore and so the redemption is more related to our asset allocation not their performance,” Grabel said. The pension is overhauling its manager lineup and cutting its allocation to global stocks, which make up the bulk of Pershing Square’s portfolio.

“I have to give Bill Ackman and his team credit. They are true to their mandate and they believe in it with conviction,” he said, adding that the pension fund realized a profit of roughly $10 million from its investment with Ackman.

A Pershing Square spokesman was not immediately available to comment.

Over the last year, Pershing Square’s fortunes have come under pressure as a bet on Valeant Pharmaceuticals tumbled 85 percent amid greater scrutiny of the company’s accounting and business practices, including sharp drug price hikes.

A new CEO started at Valeant on Monday. Ackman and Pershing Square’s vice chairman are now directors on its board, which is expected to be significantly reshaped at the next annual meeting.

Despite the heavy losses in his portfolio late last year and early this year, investors have been largely loyal to Ackman, taking out only about 2 percent of the fund’s assets in the first quarter.

Reporting by Svea Herbst-Bayliss; Editing by Tom Brown

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