Lehigh Valley

Pershing Square reduces holding in Air Products

Pershing Square Capital Management, the hedge fund operated by billionaire investor Bill Ackman, reduced its holding in Air Products by 41 percent during the quarter ending March 31st, according to information filed by Pershing Square with the SEC on May 15.

Ackman made waves in 2013 with a $2.2 billion investment in Air Products, the largest ever at the time for Pershing Square, representing a 9.8 percent stake in the Trexlertown-based chemical company.

The billionaire quickly made his power known, reportedly pushing out former Air Products CEO John McGlade, and influencing the company to make significant operating cost cuts.

Since then, Air Products has been considered a solid performer for Pershing Square, amid a time of turmoil for Ackman. Pershing Square recently sold the last of its shares in Valeant Pharmaceuticals, reportedly taking a massive loss of $4 billion.

In its 2016 Annual Report, Pershing Square appeared bullish about Air Products, writing, “We believe the upside in APD (Air Products) remains significant. APD’s business is extremely high-quality, reasonably priced and run by outstanding management.”

Air Products stock closed Monday at $143.31, slightly up from Friday. Its 52-week range is $124.02-$150.45.

Ben Nelson, Moody's Lead Analyst on Air Products, told WFMZ that Air Products is entering into a new phase.

“Air Products is at a crossroads,” he said. “The company spent several years cutting costs. Now they're entering into another phase. Slimmed down.”

While Nelson would not speculate about Pershing Square's motivation for any financial moves, he did suggest that from an investor perspective, Air Products is a company in a state of transition.

“They've been successful, and rewarded by investors,” said Nelson. “Now it's a question of what's the next step?”

Kevin Mailey, General Partner at Equity Premium Investors in Downingtown, Pennsylvania, told WFMZ that he thinks Ackman's reduction in Air Products holding can be explained.

“He freed up money to put it somewhere else, or they may have found something hot," he said.

According to Mailey, the hedge fund world operates on explosions, and billionaires like Ackman are always looking for the next big boom.

“If they have an explosive return on a stock, their take is very significant,” Mailey said.

Pershing Square would not comment to WFMZ, and Air Products could not be reached.

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