Pershing Square restructured its Herbalife short position into put options to limit downside exposure, as discussed in its Q3 2017 investor letter.
Resolved true The record shows it happened or was so.
Factual: Statements about the present or the past, checked against the record: did they hold up?
Said for an organisation they lead or work for; it counts on both records.
What would count as true or false
Judge as of 2018. The test is whether Pershing Square's Q3 2017 investor letter discusses restructuring the Herbalife (HLF) short into put options to limit downside risk. True: that letter, or Pershing Square's announcements around the same time, describes converting or restructuring the HLF short into put options to limit losses. Mostly true: the restructuring happened as described, but it was explained mainly in a different letter or quarter (for example the Q2 2017 or annual letter). Mixed: the position was restructured only partly into puts, alongside a remaining material direct short, or the description is ambiguous. Mostly false: the position was changed, but not into put options. False: no such restructuring happened, for example because the records show the position remained a direct short.
Set before the research began.
Evidence (4)
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E1 3rd Quarter 4th QTD 2017 Year-to-Date 2017 Indexes (including ... Pershing Square Holdings, Ltd. (Q3 2017 investor letter, dated November 15, 2017) · 15 November 2017 Own record
“One of our most significant developments during the quarter was the restructuring of our short position in Herbalife; our exposure is now represented entirely by put options.”
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E2 3rd Quarter 4th QTD 2017 Year-to-Date 2017 Indexes (including ... Pershing Square Holdings, Ltd. (Q3 2017 investor letter, dated November 15, 2017) · 15 November 2017 Own record
“We made the decision to convert our short position to put options because of the reduced free float of the stock, and to eliminate the incentive for market participants to attempt to squeeze us out of the position.”
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E3 Bill Ackman Is Capping His Losses on Herbalife | Fortune Fortune · 1 November 2017
““We covered the shorts and replaced them with outright put positions,” Ackman told Reuters, adding that his firm’s potential losses on Herbalife (HLF) will now be capped at 3 percent of the firm’s capital.”
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E4 Ackman’s Pershing Square Turns To Options For Herbalife Position | HedgeCo Insights HedgeCo.Net · 2 November 2017
“(FINalternatives) Famed activist hedge fund manager Bill Ackman has converted his beleaguered short position in nutritional supplement maker Herbalife into put options that cap his potential losses on the stock.”
Reasoning
Pershing Square's Q3 2017 investor letter calls the restructuring of the Herbalife short one of the quarter's most significant developments, says the exposure "is now represented entirely by put options" (E1), and says the change was made partly to remove the incentive for others to squeeze the fund out of the position (E2). Independent reports from Fortune and HedgeCo/FINalternatives (E3, E4) confirm that the short was covered and replaced with put options that cap potential losses, which Fortune puts at 3 percent of the firm's capital. Together these show the restructuring happened as claimed and was discussed in the Q3 2017 letter.
Cite this claim
Bill Ackman, “Pershing Square restructured its Herbalife short position into put options to limit downside exposure, as discussed in its Q3 2017 investor letter.” (said 2018). Verdict: resolved true. Reliability API, claim c_1edbf51d8ff2, method 0.1.0+c876030c, dataset release v1.1.2. https://epistacklabs.com/claims/c_1edbf51d8ff2
This claim is in dataset release v1.1.2, with the same verdict.
Reply to this claim
More factual claims by Bill Ackman
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Resolved false
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“We created it out of the bankruptcy of General Growth.”
Howard Hughes was created out of the bankruptcy of General Growth as a spinoff of its other assets.
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Resolved true
“2 years later, we emerged from Chapter 11.”
General Growth emerged from Chapter 11 two years after Pershing Square's investment.
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Resolved true
“The company’s got a 4 billion dollar market cap, and the goal is to build it into a trillion-dollar thing over time, compounding.”
Howard Hughes Holdings has a market capitalisation of about $4 billion.
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