Interpreting The Bill Ackman Rhetoric

The silver-haired fox, Bill Ackman, was down almost 21% through November. This is haping up to be his worst year ever with Pershing Square Capital.

Despite this, Ackman spun it in a very color light during his 3Q letter to investors; noting that the intrinsic value of the portfolio “increased materially over the course of the year.” Nonetheless, most interesting holding right now is Platform Speciality Products (PAH), so let’s forget the shenanigans going on at Valeant Pharma right now and the machinations that he and Nelson Peltz are orchestrating at Mondelez.

Platform doesn’t get much love as it is Ackman’s smallest U.S. position, but it’s also his worst performing activist target. Consider this – since he went activist at Valeant, the stock is down 45%. For Platform, the stock is off 55% since Ackman went active in Oct. 2014. Ackman also owns more of this company, ~20%, than any of his other holdings.

But the Moral of the story is; Ackman is spending a lot of time hand-holding Mike Pearson, Hunter Harrison and Irene Rosenfeld, meanwhile, he’s been a bit standoffish with Platform. That’s appealing; in part, because Martin Franklin is running things there. Marty Franklin is the Platform founder and chairman. He’s known for co-founding Jarden, where he was the CEO from 2001-2011. He’s still the Chairman.

Marty noted the other month that he’s planning on taking a more active role at Platform. And as it turns out, he’ll have more time. His Jarden was just sold to Newell Rubbermaid, booking a helluva win, where the stock went from ~$1.50 to $57 in 15 years.

Now it’s time to focus on Platform, which could use a little love. It’s trading about 15% below the early 2014 IPO price. Now, for the goodies, Ackman was talking up Platform in his 3Q letter. Here’s the interpretation of his rhetoric:

All chemical rollups, and rollup companies in general, are getting taken to the woodshed. Hell, just look at Colfax and XPO. But never fear, the major management changes at Platform are a positive. It’s lost its head of ag solutions, CEO and CFO over the last six months. The CEO was ousted because he couldn’t see eye-to-eye with Marty Franklin. Marty’s ready to get his hands dirty and he’s buying more shares in the open market.

The rollups are getting washed out here with tax-loss selling. Platform is an easy play on the growing demand for food and urbanization of emerging markets. I’m not as huge of a fanboy of Marty Franklin as Ackman, but this Brit is a likable guy. Starter position in Platform.