market folly

Bill Ackman's hedge fund Pershing Square Capital Management just filed two separate 13G's with the SEC.  Both revealed that Pershing has completely sold out of its previous positions in Family Dollar (FDO) and Fortune Brands Home & Security (FBHS).

Each stock has seen material price appreciation and so this could simply be a case of harvesting profits to allocate capital to more compelling ideas.  Pershing exited FBHS on April 27th and FDO on April 19th.

For those interested, we've previously highlighted Ackman's case for FBHS as well as his FDO thesis.

While Pershing has exited its FDO position, Nelson Peltz's Trian Partners continues to be a large shareholder in the name.  They provided an update on the stake in their first quarter letter to investors:

"On March 28th, Family Dollar reported 2Q12 earnings which included EPS of $1.15, up 17% year over year, and comparable store sales growth of 4.5%. Family Dollar also increased the low end of its FY12 EPS guidance by $0.05 and issued 3Q12 comparable store sales growth guidance of 5% to 7%, marking acceleration in comparable store sales growth from the prior two quarters.

The company has also strengthened its management team yet again with the appointment of Mary Winston (previously with Giant Eagle, a $9 billion privately held grocery chain) as Chief Financial Officer on April 10th, a move we fully support. This management addition follows the September 2011 appointment of Mike Bloom as President and Chief Operating Officer. Mike has already made meaningful contributions to the company and we believe that investors and research analysts have rapidly come to appreciate the level of expertise and enthusiasm he brings to his role as a prime driver of operational improvements."

Stay tuned as we'll be posting more excerpts from Trian's letter in a separate post.

For more on Pershing Square's latest activity, we posted Bill Ackman's latest interview up today as well.