by Val Cipriani, Investors’ Chronicle, December 6, 2024:
Bill Ackman’s Pershing Square Holdings (PSH) will buy back $100mn (£79mn)-worth of shares as it attempts to close a persisting discount to net asset value (NAV), after a difficult second half of the year for the trust.
Ackman’s vehicle has been unpopular with investors recently despite an outstanding long-term track record that saw it outperform the S&P 500 since its listing in the UK in 2017. This was exacerbated by Ackman’s fundraising flop earlier this year, where a planned float of a closed-end fund fund as its raising target went from $25bn to $2bn to zero.
Between 2 May 2017 and 2 December 2024, the trust returned 243.6 per cent in sterling terms, against 183.7 per cent for the S&P 500. But as of 2 December, the trust was trading 31.6 per cent below its NAV.
This is a much wider discount than sported by the other main US-focused trusts. At the same date, JPMorgan American (JAM) was actually trading at a small premium, Baillie Gifford US Growth (USA) was in line with its NAV, and The North American Income Trust (NAIT) had a 10 per cent discount.
Earlier this year, Pershing Square’s discount temporarily narrowed – it stood at 22.7 per cent as of the end of June. But by the end of July, Ackman had abruptly cancelled the IPO of a US-listed fund for which he had hoped to raise $25bn. Demand for the fund proved much lower than Ackman had envisioned, and the fundraising target was lowered to $2bn before the tycoon abandoned the plan entirely. He said at the time he had found a “better transaction structure” for his grand plans..
James Carthew, head of investment companies at QuotedData, explained that the launch of a US fund had two key attractions for the London-listed company’s shareholders: it would have resulted in lower fees, and the US vehicle would have bought some of its stake in UMG.
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