Tags: ackman | housing | Recovery

Ackman’s Pershing Capital Bets on Housing Recovery

By    |   Thursday, 20 Oct 2011 07:40 AM

Pershing Square Capital Management, the hedge-fund firm run by superstar investor Bill Ackman, is banking on a recovery in the housing sector.

Pershing partner Ali Namvar played up the idea of such a rebound in a presentation at a recent investment conference in New York, CNBC reports.

Namvar was touting the stock of Fortune Brands Home & Security, the recently spun-off kitchen and security unit of Fortune Brands.

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(Getty Images photo)
“Investing in FBHS is a great low-risk way to profit from an eventual housing recovery,” Namvar says. Pershing owns 15 percent of the stock.

The shares recently traded at $15, but Namvar says that valuation assumes almost no rebound in housing during the next five years. The company is now worth $18 to $27 a share, and operating earnings may double or triple if housing starts rebound to historical norms, he says.

“FBHS is very cheap with immense upside potential. The downside is limited because of the very clean balance sheet, allowing the company the option to make some very accretive additions.”

Namvar acknowledges that housing may not recovery quickly, but says FBHS can thrive anyway.

Housing starts surged 15 percent in September. Economists expressed cautious optimism after the news.

“The housing recovery over the past year has been painfully slow, but we do believe that housing is gradually healing and recovering,” Nishu Sood, a Deutsche Bank housing analyst, writes in a report obtained by the Los Angeles Times.

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Pershing Square Capital Management, the hedge-fund firm run by superstar investor Bill Ackman, is banking on a recovery in the housing sector. Pershing partner Ali Namvar played up the idea of such a rebound in a presentation at a recent investment conference in New York,...
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Thursday, 20 Oct 2011 07:40 AM
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