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Bill Ackman rides the crazy train

August 13, 2013: 12:57 PM ET
All aboard! Bill Ackman's largest holding is not J.C. Penney. It's Canadian Pacific. Its shares have surged. But few talk about that.

All aboard! Bill Ackman's largest holding isn't J.C. Penney. It's Canadian Pacific. Shares have surged, but few know that.

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.

Hedge fund manager Bill Ackman is having a rough year. But don't shed too many tears for him ... not that you probably would anyway, given that he's a billionaire and all.

Yes, Ackman's Herbalife (HLF) short may turn out to be one of the worst bearish bets in history. Herbalife's stock has doubled so far in 2013. Making matters worse, he had to endure a vitriolic personal attack on CNBC by fellow activist investor Carl Icahn.

Related: Herbalife wraps up 'best quarter ever'

And yes, his investment in J.C. Penney (JCP) has been a complete disaster. Ackman said Tuesday he's resigning from the struggling retailer's board. He may not have thrown in the towel on JCP just yet. (That would require him selling his stake.) But he's definitely waving it ... with good reason. JCP is down 35% this year after a more than 40% plunge last year.

Many other high profile stocks that were losers last year, such as Best Buy (BBY), Hewlett-Packard (HPQ), Electronic Arts (EA) and Xerox (XRX) have gone from zeros in 2012 to heroes this year. So it's all the more embarrassing that JCP has not joined the list of those comeback stocks.

The JCP meltdown is even worse when you consider that Ackman supported both the hiring of former Apple (AAPL) retail honcho Ron Johnson to lead JCP, and his subsequent firing, and then publicly demanded last week that the company hire yet another new CEO. It seems safe to say that Ackman's activism at JCP has been nothing short of a train wreck.

Related: J.C. Penney plunges as Ackman pushes for another new CEO

But here's where the Ackman narrative improves. He may have gone off the rails with his Herbalife and J.C. Penney bets. But you may be surprised to hear that Ackman's biggest investment (at least from a long perspective) is a train company that has done ridiculously well: Canadian Pacific (CP).

Ackman's Pershing Square Capital Management bought a more than 12% stake in Canadian Pacific back in the fall of 2011. He battled with the company's board and ultimately succeeded in ousting its CEO. Investors have been handsomely rewarded -- and then some.

Shares of Canadian Pacific were trading around $45 when he first purchased the stake. They are now around $122. As a result of the stock's nearly tripling, Ackman disclosed in June that he's going to sell a chunk of his stake over the next six to twelve months to take in some profits.

This should serve as a reminder that even though Ackman has some notable flops this year, he still deserves some respect from investors and traders.

After all, Ackman also has done quite nicely with his stake in consumer products giant Procter & Gamble (PG). He acquired his stake in the second quarter of 2012, when P&G was trading in the mid-$60s. P&G is Pershing's second-largest holding.

Since then, P&G CEO Bob McDonald announced an early retirement. Ackman was highly critical of McDonald. P&G's stock? It's now trading at about $82.

Ackman also successfully pushed conglomerate Fortune Brands to split into two companies back in 2011: one for its kitchen and bath furnishing and Master Lock units, and one for its alcoholic beverage business. Ackman no longer owns the former: Fortune Brands Home & Security (FBHS). But he does still own the latter: Beam (BEAM). And Beam shares are up nearly 50% since the split.

Related: Hedge fund manager Leon Cooperman says Bill Ackman is 'foolish'

Ackman was also one of the lead investors in the convoluted return of Burger King (BKW) to the public markets. Since Burger King's debut last summer, the stock is up more than 30%.

Still, investors seem to think that Ackman's best days are behind him. When he disclosed at the end of July that he bought a nearly 10% stake in specialty gas company Air Products and Chemicals (APD), the stock rose that day ... but has since fallen 5%.

Ackman is a very easy target right now. And I can't stress enough how silly he looks for his solitary crusade against Herbalife and for his waffling on JCP.

But Ackman's no dummy. His track record -- even if you throw in his botched plan to shake up Target (TGT) and ill-timed bet on Borders a few years ago -- is still pretty strong over the long haul. So counting him out because of two bad (even colossally bad) investments this year might not be the smartest thing to do either.

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Paul Lamonica
Paul R. La Monica
Assistant Managing Editor, CNNMoney

Paul R. La Monica is an assistant managing editor at CNNMoney. He is the author of the site's daily column, The Buzz, and also tweets throughout the day about the markets and economy @LaMonicaBuzz. La Monica also oversees the site's economic, markets and technology coverage.

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