Bill Ackman's Pershing Square is cashing out of Universal Music Group after the music giant rejected its takeover approach. The hedge fund holds about 80.6 million shares valued at more than $1.5 billion, according to sales documents from Bank of America.

Pershing Square first took a position in 2021 and now stands to realize roughly $600 million in gains, including dividends received over nearly five years. The exit follows Universal's rejection of a $65 billion bid that Ackman's investment vehicle proposed.

Universal's board deemed the offer insufficient for the world's largest music company, which represents artists like Taylor Swift, Kendrick Lamar and Billie Eilish. This marks the second time Ackman has been unable to secure a transaction with the Dutch-listed music firm.

Despite the setback, the fund's timing proved fortuitous as music streaming growth and catalog valuations surged during the holding period. Ackman's exit underscores how activist investors can generate substantial returns even when strategic ambitions fall short.