One of Sachem Head Capital Management’s
partners is leaving the firm.
The activist hedge fund firm founded by Bill Ackman
Scott Ferguson told clients in a recent letter that Ernesto
Cruz will become a portfolio manager for GIC Private Ltd., the
sovereign wealth fund for Singapore. According to people who
have seen the letter, Ferguson was very supportive of the move,
telling clients it is a good opportunity for Cruz to do his own
thing. The firm declined to comment.
Cruz joined Sachem Head in January 2013 and has served as a
partner and analyst.
Before that, the Harvard graduate spent a year as an analyst
JAT Capital and more than five years as an analyst at
Highline Capital Management.
Cruz’s departure comes after
Sachem Head suffered its worst year since Ferguson founded
the firm in November 2012. The firm also heavily shook up its
portfolio in the fourth quarter.
Ferguson was the first analyst at
Pershing Square Capital Management, which he joined in
September 2003, and became a partner after nine years with the
New York firm.
He left in 2012 to launch Sachem Head and began accepting
outside money in July 2013.
In 2014, Ferguson’s first full year managing
outside money, Sachem Head gained 22.5 percent and returned
another 14.3 percent in 2015. Last year, however, it fell 80
basis points, or less than 1 percent.
This year, Sachem Head’s main fund has already
gotten off to a strong start, climbing 4.6 percent in January,
and is said to be up in February. Today, the firm manages more
than $4.5 billion.
Like most activist firms, Sachem Head runs a highly
concentrated book. At year-end it had $2.6 billion in U.S.
equity assets spread over just 13 issues.
By far its largest position is in Autodesk, the maker of 3-D
design software, accounting for more than 36 percent of the
equity portfolio. The stock has gained more than 17 percent
this year after returning about 7.7 percent last year.
Sachem Head is the third-largest shareholder. In March 2016,
Autodesk named three new directors to its board under a
settlement reached with Sachem Head and
Eminence Capital. One of the three directors is Ferguson,
who also became a member of the board’s
compensation and human resources committee.
Otherwise, nine of the firm’s 13 stocks are new
positions established in the fourth quarter. For example,
Sachem Head took a large stake in SBA Communications, instantly
making it the firm’s second-largest position
overall, accounting for more than 7 percent of its U.S. equity
assets. Shares of the wireless infrastructure giant are already
up 8 percent for the year.
Biotech specialist Celgene, the second-largest of Sachem
Head’s new positions, is up nearly 3 percent.
Meanwhile, longer term holding Charter Communications
— now Sachem head’s third largest long
— is up nearly 14 percent for the year.
Sachem Head also unloaded six positions in the fourth
quarter, including FleetCor Technologies, its fourth-largest
long in the third quarter, and Allergan, its sixth-largest
position at the time.