October was a pretty good month for the FTSE 100. The UK’s blue-chip index gained over 150 points (+2.1%) to close at 7,237.57 points on Friday. As you’d expect, some Footsie shares did much better (and much worse) than the wider index.
The FTSE 100’s winners and losers in October
The FTSE 100 actually includes 101 shares, because one is dual-listed. Of these 101 stocks, 64 increased in value in October. The highest rise was 14.3% and the smallest increase was a tiny 0.1%. The average gain across all 64 winners was 5.7%, almost triple the wider index’s increase. At the other end of the scale lie 37 losing stocks, with losses ranging from a mere 0.4% to a marked decline of 14.8%. The average loss across all 37 losers was 4.7%.
This low-profile share caught my eye
Looking over the 13 Footsie shares with gains of 9% and more, I spotted one fairly obscure stock that I’ve been monitoring for some time. Unlike the FTSE 100’s many household names, this particular stock is fairly obscure — even arcane and mysterious. The Footsie winner to catch my attention for its October performance is Pershing Square Holdings (LSE: PSH). For the record, Pershing was in the top 10 of Footsie gainers this month, recording a 10.7% rise.
Pershing has easily beaten the FTSE 100
I imagine that if I asked the average person in the street what Pershing Square Holdings does, I’d get a blank stare. But, to me, Pershing is a most fascinating and unusual UK stock, because it’s actually a listed hedge fund. However, I’ve written about this unusual share lurking in the FTSE 100 only four times in 2020-21.
Before I explain what Pershing does, I’ll first set out its share-price performance over various periods. On Friday, PSH stock closed at 2,940p, up more than a tenth (+10.7%) over one month. It’s also ahead 16.2% over three months and 8.5% over six months. Over one year, it has leapt by 42%, comfortably beating the FTSE 100’s gain of 29.8%. Over five years, it has absolutely obliterated the Footsie (+8.1%), skyrocketing by 142.2%. Impressive.
PSH is a listed hedge fund
Buying a PSH share for less than £30, I can invest in Pershing Square Capital Management (PSCM). PSCM is a successful US hedge fund run by American investor Bill Ackman. Ackman’s successful stock-picking has delivered him a net worth of $3.3bn (£2.4bn). Today, PSH’s market value is over £6.2bn. PSH is actually an investment trust, with shares listed in London since May 2017. ‘Wild Bill’ Ackman is known for making large, value-driven bets on listed stocks. In one month in 2020, he turned $27m into $2.6bn by buying credit-protection derivatives weeks before ‘Meltdown Monday’ (23 March 2020). Wow.
In my view, Bill Ackman is one of the best fundamental/value investors in the business. I don’t own PSH, but I’d be more than happy to entrust some of my money to him. Indeed, I’m annoyed that I didn’t buy PSH stock when it fell below £25 in August. Nevertheless, I’m rather excited at the thought of owning part of a hedge fund (something normally reserved for the ultra-rich). But I’m also expecting a fairly rocky ride along the way. In 2020-21, PSH stock has ranged from a low of 1,122p on 23 March 2020 to a high of 2,955p today. Hence, while I’m willing to take a punt on PSH and Bill Ackman, this is not a stock for faint-hearted or risk-averse investors!
