Net of all fees, the fund returned 2.9 percent in the third quarter and is lower by 13.5 percent since the start of 2016. By comparison, the S&P 500 index returned 3.8 percent in the third quarter and gained 9.8 percent since the start of the new year.
Ackman did note in his letter that his fund saw a substantial decline in performance from August 2015 through March 31 of this year. The losses were largely attributed to the massive losses in Valeant Pharmaceuticals Intl Inc VRX, which has fallen from over $200 per share in 2015 to a multi-year low below $15 per share this year.
Nevertheless, the fund's performance was positive in both the second and third quarter of this year and remains in the green in the fourth quarter to date.
Here are some of the notable highlights from the letter.
Valeant
Valeant now represents approximately 5 percent of the fund's entire capital. Despite ongoing challenges to the stock, Ackman stated that the company bolstered its management team, improved the average selling prices in its dermatology unit, stabilized its salesforces and yielded acceleration in Salix script trends.
Ackman also stated that Valeant's commitment to reduce more than $5 billion in debt over the next 18 months will act as an "important catalyst for value creation and stock appreciation."
Chipotle Mexican Grill
Ackman's fund acquired a 9.9 percent stake in Chipotle Mexican Grill, Inc. CMG back in September at an average price of $405 per share.
One of Ackman's investment philosophies is that "a good time to buy a great business is when it is in temporary trouble." The casual fast food chain fits the profile following a food safety issue in late 2015, which resulted in a peak decline in average unit sales of 36 percent.
Ackman believes Chipotle's reputation has been "bruised," but over time, the company will "not only recover but become much stronger."
Looking forward, the investment manager believes Chipotle can grow its store base to a total of 5,000 units from its current approximate 3,000 store count. In fact, returns on capital for new units remain "extremely compelling" even at the current lower sales level.
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