By Emma Wallis, News editor, Trustnet, 28 February 2024:
Pershing Square Holdings has a history of headline-grabbing derivatives trades that have delivered billions of dollars in profit, a track record of top-quartile performance over one, three and five years, and a star manager in US hedge fund veteran Bill Ackman. Yet the UK’s third-largest investment trust (with a market capitalisation of £7.3bn) persistently trades at a significant discount.
While this is narrowing, it is not a rapid pace of change. Its discount tightened from 33% to 29% over the course of last year and has come in further to 26% during the past two months, but remains wide.
One catalyst for a turnaround in investor sentiment could be the launch of Pershing Square USA, a US-listed, closed-ended fund with a similar investment strategy to the UK trust, which owns a concentrated portfolio of eight to 12 North American companies, complemented by derivatives trades that tend to perform well when the core portfolio of stocks falls.
As well as benefits such as marketing efforts on the new fund throwing the UK version back into the spotlight, there are more tangible plus points.
The US portfolio will not charge a performance fee but it will have a 2% management fee, 20% of which will be used to offset the UK trust’s performance fee of 16% above a high watermark. (The UK version also charges a 1.5% management fee.)..
Matthew Read, senior analyst at QuotedData, said there was a lot for investors to like, particularly around Pershing’s performance.
The trust has more than tripled investors’ money over five years and returned almost double that of its next closest rival in the IT North American Sector – JPMorgan American – as the below chart shows.
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