October was a good enough month for the FTSE 100. The British blue chip index gained more than 150 points (+ 2.1%) to close at 7,237.57 points on Friday. As you might expect, some Footsie stocks did much better (and much worse) than the larger index.
FTSE 100 winners and losers in October
The FTSE 100 actually consists of 101 stocks because one is dual listed. Of those 101 stocks, 64 rose in value in October. The highest increase was 14.3% and the lowest was a tiny 0.1%. The average gain over the 64 winners was 5.7%, almost triple the increase in the larger index. At the other end of the scale are 37 losing stocks, with losses ranging from a mere 0.4% to a steep drop of 14.8%. The average loss over the 37 losers was 4.7%.
This quiet action caught my eye
Browsing through the 13 Footsie stocks with gains of 9% and above, I spotted a fairly obscure stock that I have been watching for some time. Unlike the many familiar names of the FTSE 100, this particular stock is quite obscure – even mysterious and mysterious. The Footsie winner for getting my attention for his October performance is Pershing Square (LSE: PSH). For the record, Pershing was among Footsie’s top 10 winners this month, registering a 10.7% increase.
Pershing easily beat the FTSE 100
I imagine if I asked the average person on the street what Pershing Square Holdings is doing, I would have a blank stare. But, for me, Pershing is one of the most fascinating and unusual UK stocks, because it is in fact a listed hedge fund. However, I have only written about this unusual part lurking in the FTSE 100 four times in 2020-21.
Before I explain what Pershing does, I will first discuss the performance of its stock price over different time periods. PSH stock closed at 2,940p on Friday, up more than a tenth (+ 10.7%) on a month-over-month basis. It is also ahead of 16.2% over three months and 8.5% over six months. Over one year, it jumped 42%, comfortably beating the 29.8% gain of the FTSE 100. In five years, it completely wiped out Footsie (+ 8.1%), soaring 142.2% . Impressive.
PSH is a listed hedge fund
By buying a PSH share for less than £ 30, I can invest in Pershing Square Capital Management (PSCM). PSCM is a successful US hedge fund managed by US investor Bill Ackman. Ackman’s successful stock picking has earned him a net worth of $ 3.3 billion (£ 2.4 billion). Today, PSH’s market value exceeds £ 6.2 billion. PSH is actually an investment trust, whose shares have been listed in London since May 2017. ‘Wild Bill’ Ackman is known for his large and value-oriented bets on listed shares. In one month in 2020, he turned $ 27 million into $ 2.6 billion by purchasing credit protection derivatives weeks before “Meltdown Monday” (March 23, 2020). Wow.
In my opinion, Bill Ackman is one of the best fundamental / value investors in the industry. I don’t own a PSH, but I would be more than happy to entrust some of my money to it. Indeed, I was annoyed that I didn’t buy PSH shares when they fell below £ 25 in August. Still, I’m pretty excited about owning part of a hedge fund (which is normally reserved for the ultra-rich). But I also expect a fairly rocky ride along the way. In 2020-2021, PSH action varied from a low of 1,122p on March 23, 2020 to a high of 2,955p today. Therefore, while I am ready to take a kick out of PSH and Bill Ackman, this is not action for the timid or risk averse investors!
Cliffdarcy has no position in any of the stocks mentioned. The Motley Fool UK has no position in any of the stocks mentioned. The opinions expressed on the companies mentioned in this article are those of the author and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering a wide range of ideas makes us better investors.
