Pershing Square Holdings Ltd (PSH) has published its annual report for the year ended 31 December 2024. Despite a challenging macro and geopolitical backdrop, the closed-ended fund delivered a NAV total return of 10.2%, while the share price rose 8.3%, as the discount to NAV widened slightly from 29.6% to 31.2% over the year. In comparison, the S&P 500 returned 25.0% in 2024, buoyed by strong performance from a handful of mega-cap technology names – a narrow rally that PSH, which follows a concentrated value-oriented strategy, was not positioned to fully capture.
Over longer time frames, however, the trust continues to deliver impressive returns. Its results highlight its five- and seven-year compound annual NAV returns of 22.2% and 22.9%, respectively, with share price appreciation of 21.6% and 21.1% over the same periods.
New investments and solid early 2025 performance
The investment team made three new investments in 2024: Nike, Brookfield, and more recently, Uber. All three are large-cap businesses that PSH sees as high quality with the potential for long-term earnings growth.
Year-to-date to 11 March 2025, PSH’s NAV has modestly declined 0.6%, while the share price is up 0.1%. This contrasts with a 5.0% drop in the S&P 500 over the same period, suggesting a stronger relative start to the year for the fund.
Dividend increase and continued share buybacks
PSH increased its dividend by 13% in January 2025, the third such increase since adopting a NAV-linked dividend policy in 2022. The dividend has now grown by 65% since the inception of the programme, reflecting both NAV growth and the board’s commitment to returning capital.
In addition, the company continued its share buyback programme, repurchasing 2.5m shares in 2024 at an average discount of 30.6% to NAV. Since the programme began in 2017, PSH has repurchased 67.0m shares, or 26.9% of its initial share count, at a weighted average price of US$21.24.
Debt profile and balance sheet strength
As of March 2025, the trust’s weighted average cost of capital was 3.1% and its weighted average debt maturity 7 years, with no margin leverage and no mark-to-market covenants on its bonds. The trust’s debt-to-capital ratio stood at a 15.7%, which the board sees as appropriate given the liquidity and quality of the underlying portfolio.
Strategic developments and corporate actions
During the year, PSCM sold a 10% equity interest in its newly formed holding company, Pershing Square Holdco, L.P., to long-term strategic partners. The board supported this move, which it believes enhances the investment manager’s long-term stability without impacting its role in managing PSH.
Meanwhile, the trust delisted from Euronext Amsterdam in January 2025, consolidating all trading on the London Stock Exchange. The board believes this will improve liquidity and reduce regulatory complexity.
An attempted IPO of a new vehicle, Pershing Square USA Ltd (PSUS), was ultimately withdrawn in July 2024 following investor feedback. However, the announcement of PSUS and accompanying amendments to PSH’s performance fee structure led to a temporary narrowing of the discount, suggesting investor interest in the broader Pershing Square franchise.
Discount remains wide, but board sees catalysts ahead
While PSH’s shares continue to trade at a wide discount to NAV (30.9% as of 11 March 2025), the board remains optimistic that further performance, dividend increases, and new fund launches could act as catalysts. Amendments to the performance fee structure were also designed to improve alignment with shareholders.
“The most powerful driver of long-term shareholder returns and discount narrowing will be continued strong absolute and relative NAV performance,” the board noted.
[QD comment MR: PSH continues to deliver robust long-term NAV growth, supported by a disciplined, value-focused investment strategy and active capital management. While the persistent discount is likely a frustration for some shareholders, structural enhancements, increasing dividends, and high-quality new investments could help build further momentum into 2025.]
