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- Warren Buffett's Berkshire Hathaway has lost Bill Ackman as an investor.
- The hedge-fund manager revealed the sale of his Pershing Square fund's $1 billion Berkshire stake in a conference call on Wednesday.
- Pershing sold Berkshire in the last few weeks to free up cash so it can capitalize if prices fall again, Ackman said on the call.
- The move is surprising as Ackman boosted his Berkshire holdings by more than a third in the first quarter.
- Visit Business Insider's homepage for more stories.
Warren Buffett's Berkshire Hathaway has lost billionaire hedge-fund manager Bill Ackman as an investor.
Ackman revealed the sale of his Pershing Square fund's $1 billion stake in Berkshire, and its exit from much smaller positions in Blackstone and Park Hotels & Resorts, in a conference call on Wednesday. Berkshire accounted for just over 15% of Pershing Square $6.6 billion stock portfolio at the end of March.
Pershing Square sold its Berkshire stake in the last few weeks to free up cash so it can capitalize if juicy investing opportunities emerge, Ackman explained on the call, according to a transcript on Sentieo, a financial-research site.
"Today, we have $10 billion of capital to invest, we can be much more nimble," he said, highlighting Pershing's smaller size relative to Berkshire.
"And so our view was generally we should take advantage of that nimbleness, preserve some extra liquidity in the event that prices get more attractive again."
Pershing Square confirmed the sale to Business Insider, but declined to comment further. Bloomberg first reported the news.
Ryan Israel, a partner at Pershing, elaborated on the decision to dump Berkshire during the conference call.
While Pershing's bosses expect Berkshire to be a "strong investment over the longer term," their view is that "the current environment means there may be more than typical opportunities for us to see very high-returning investments."
Berkshire has showcased the quality of its subsidiaries and made strides towards boosting its profit margins relative to peers during the recent downturn, Israel continued.
However, Buffett's company has bucked Pershing's expectations by not deploying its $137 billion in cash reserves to buy stocks and other securities, acquire companies, strike deals, and repurchase shares, he added.
If Berkshire does put its cash to work in the short term, Israel argued, it will likely be during a period when Pershing also enjoys a choice of enticing investment options. Following the Berkshire sale, Pershing will be armed with enough cash to take advantage of them, and be able to move more nimbly than Berkshire due to its smaller size, he added.
Still, Ackman's exit from Berkshire is surprising. Pershing only invested in Berkshire last year, and boosted its stake in the company by more than a third to about 5.5 million shares in the first quarter. Those shares were valued at almost $1 billion at the end of March.
Moreover, Ackman has repeatedly praised the famed investor and his business.
"Berkshire Hathaway was built by Warren Buffett to withstand a global economic shock like this one," he wrote in Pershing's 2019 annual report.
"We believe that Berkshire will emerge from this crisis as a more valuable enterprise," he added.
Ackman famously turned $27 million into $2.6 billion by hedging his fund against the coronavirus sell-off, offsetting the damage to its equity portfolio.
He used the windfall in March to boost Pershing's stakes in Berkshire as well as Hilton, Lowe's, and Burger King-parent Restaurant Brands, and to reinvest in Starbucks.
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