market folly

Pershing Square Capital Management, the hedge fund ran by Bill Ackman, has filed an amended 13D with the SEC and has disclosed a 7.4% ownership stake in General Growth Properties (GGP). The 13D was filed due to their activity on January 9th, 2009 where they added an additional 2.8 million common shares and an additional 3.5 million shares through swaps. Pershing Square now owns 22,901,194 common shares of GGP, and economic exposure to 52,000,000 shares through swaps, for a total aggregate economic exposure to over 74 million shares (24.1% of the outstanding common shares). Reportedly, Pershing has taken the stake in GGP as they wish for them to file for bankruptcy. That might seem silly upon first glance, but take a second to read about Pershing's apparent rationale behind buying GGP. You can also view the rest of Pershing Square's holdings here.

Pershing Square Capital Management is a well known value/activist based hedge fund. The fund started in 2003 after Gotham Partners broke up. The past few years, they have had notable short positions in the bond insurers such as MBIA (MBI) and Ambac (ABK). Some of his activist positions include Target (TGT) and Borders (BGP). Simply put, Ackman is a smart man. We wrote about Mr. Ackman's recent speech at the Value Investing Congress as well as Ackman's lengthy interview with Charlie Rose. Furthermore, you can view one of Pershing Square's investor letters here.

Taken from Google Finance, General Growth Properties is "a self-administered and self-managed real estate investment trust (REIT). GGP, through its subsidiaries and affiliates, operates, develops, acquires and manages retail and other rental properties, primarily shopping centers, which are located primarily throughout the United States."