Despite a 2.7% net return in the month of July, billionaire investor Bill Ackman's Pershing Square is still facing a net loss of about -19% on the year so far. The fund has made headlines for its troubles with Herbalife Ltd. (HLF) and Valeant Pharmaceuticals International Inc. (VRX), while at the same time clients are pulling money out and total assets under management (AUM) are down by billions of dollars. Given this backdrop, analysts watched carefully when Pershing Square released its 13F filings to the SEC, detailing how its positions have changed since the end of the first quarter. The fund has concentrated its investments in just 11 long positions covered by the 13F report, and Ackman has made significant changes to at least two of those holdings since the end of March of 2016. (For related reading, see: What is a 13F and When is it Useful?)

Zoetis and Canadian Pacific See Cuts

Zoetis Inc. (ZTS), a major producer of medications and vaccines designed for use in animals, is one of the positions in Ackman's portfolio to see significant cuts in the second quarter. When Pershing Square initially invested in the animal health company in late 2014, analysts speculated that the investor would take an activist position, guiding Zoetis toward selling itself off to a larger company. Perhaps because other deals have occupied Ackman's time and attention since then, this has not yet occurred. Following the end of the second quarter report, it is unlikely that Ackman will be able to make a move of this type any time soon, either; the 13F indicates that Ackman sold off half of his ZTS shares by the end of June, ending with just over 21 million shares. In fact, in an earlier filing since the end of the second quarter, Ackman revealed that Pershing Square had sold off even more of its stake than that, ending with just under 19 million shares of ZTS.

Another major holding of Ackman's that is no longer as significant is Canadian Pacific Railway Ltd. (CP). The position, formerly one of the most productive for Ackman since his initial investment in 2011, declined to just 9.8 million shares by June 30, down from 13.9 million at the end of the first quarter. However, additional reports indicate that since that time, Ackman has sold off his remaining stake and exited the position entirely, allowing for about $1.5 billion of additional funds available for investment elsewhere. (For more, see also: T. Rowe Price Sues Valeant Pharmaceuticals for Fraud.)

Difficult Times Not Yet Over

While Ackman has seen a slight increase in AUM and returns in recent months, the rash of recent negative publicity surrounding Herbalife and Valeant combined with persistent net losses on the year suggest that the difficult times are not over yet. Perhaps the sale of these two major stakes means a new investment strategy is on the horizon.