Reuters
Published Sep 22, 2021 03:58PM ET
By Svea Herbst-Bayliss
BOSTON (Reuters) - Hedge fund manager William Ackman's 10% bet on Universal Music Group (AS:UMG) helped nearly double returns at his own portfolio to 15.3% this week after shares in the world's biggest music label surged in their first hours as a publicly traded company.
Ackman, who runs hedge fund firm Pershing Square Capital Management, told investors that his Pershing Square Holdings portfolio returned 15.3% after fees since January. The fund was up 7.7% a week ago.
The gains were largely fueled by his investment in Universal Music Group (UMG), the label that is home to Taylor Swift, Bob Dylan and the Beatles. Ackman pivoted a few weeks ago, buying the sizable stake in the record label through his portfolios after his initial plan to invest through a blank-check company deal crumbled in July amid scrutiny from U.S. regulators.
The billionaire investor told his investors that humans need food, water and music, and that music, which he called the cheapest form of entertainment in the world, is a very savvy investment because it pays royalties.
He raised $1.1 billion in fresh capital for the UMG stake through a co-investment vehicle, a structure he has previously used for investments in Automatic Data Processing (NASDAQ:ADP) and Air Products (NYSE:APD) & Chemicals. In total, Ackman's funds invested $4 billion in UMG.
Ackman posted a 70.2% return in 2020 following a 58.1% return in 2019. This year the HFRX Global Hedge Fund Index, which measures returns for the industry, is up 3.58%.
In the first eight months of the year Ackman's best performing stocks included Chipotle Mexican Grill (NYSE:CMG), Agilent Technologies (NYSE:A), and Domino's Pizza (NYSE:DPZ). He sold Agilent to help fund his commitment to UMG.
In its first day of trading in Amsterdam on Tuesday, UMG's shares leapt by more than a third, pushing its market value to $55 billion in Europe's largest listing of the year.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.