This article first appeared on GuruFocus .
-
Net Asset Value (NAV) Growth:The company highlighted that the underlying portfolio companies are expected to compound at a high rate, driving NAV growth over time.
-
Fee and Performance Fee Revenue:Expected to increase as NAV rises, flowing into the company's earnings stream.
-
Portfolio Composition:Includes holdings in high-quality businesses such as Amazon, Meta, Microsoft, Alcon, and Netflix.
-
Leverage:Plans to use investment-grade debt to enhance long-term returns.
-
Warning! GuruFocus has detected 5 Warning Sign with LSE:PSH.
-
Is LSE:PSH fairly valued? Test your thesis with our free DCF calculator.
Release Date: August 13, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Pershing Square Holdings Ltd ( LSE:PSH ) benefits from a permanent capital structure, allowing it to compound earnings from high-quality businesses without needing to raise new funds.
-
The portfolio holds a dozen or more high-quality businesses expected to compound at high rates, with potential for rerating to higher valuations, boosting NAV and fee income.
-
The company has a strong pipeline of opportunities, including the potential for significant upside from Fannie Mae and Freddie Mac, which could increase AUM by $8-9 billion if the administration acts favorably.
-
PSH has attractive low-cost financial leverage, with about 18% debt to total assets at an average cost of less than 4%, enhancing returns.
-
The management team is actively addressing the discount to NAV in PSUS, with plans for increased marketing and investor outreach, which could also benefit PSH's perception.
Negative Points
-
Pershing Square Holdings Ltd ( LSE:PSH ) trades at a wider discount to NAV compared to PSUS, indicating market skepticism or lack of demand.
-
PSH charges an incentive fee, which is a negative for investors compared to PSUS's no-incentive-fee structure.
-
For US investors, PSH is a PFIC, making it tax-inefficient and less attractive, potentially limiting its investor base.
-
The company's performance is subject to high volatility in stock prices, which can lead to significant NAV fluctuations in the short term.
-
The management acknowledges that the trading of PSUS is 'absurd' and has been poor, reflecting broader issues with investor demand and market perception that could also affect PSH.
Q & A Highlights
Q: Can you update us on the timing and size of future fundraises, including asymmetric, crossover and opportunistic? A: Bill Ackman ( Trades , Portfolio ), CEO and Chairman, stated that future fund launches will be episodic and depend on market conditions and business needs. The first new launch will be Pershing Square Ventures, targeted for fall/end of year. He emphasized that the primary driver of growth will be the underlying performance of existing entities, citing the example of Fannie Mae and Freddie Mac, where a successful outcome could increase fee-paying assets by 30% overnight. The venture vehicle will start small but is strategically valuable for identifying disruptive trends and offering retail investors access to pre-IPO companies like SpaceX at lower valuations.
Q: How should we think about the timing and size of the investment-grade leverage you plan to add to PSUS? A: Bill Ackman ( Trades , Portfolio ) explained that the plan is to add 15% to 20% debt to total assets for PSUS, a very conservative approach compared to typical hedge fund leverage. The process is a "full court press," with rating agency meetings beginning in early September, followed by a bond offering. He noted that if the incremental capital were available today, they have places to deploy it.
Q: Given the low equity risk premium in the market, how do you account for that in your risk management and investment expectations? A: Bill Ackman ( Trades , Portfolio ) and Ryan Israel, CIO, responded that they focus on individual securities rather than broad market metrics. Ryan Israel highlighted that the equity risk premium calculation often misses the growth profile of equities. He noted that their portfolio has a higher earnings yield and nearly double the earnings per share growth compared to the market. Bill Ackman ( Trades , Portfolio ) added a comparison: owning a 5% earnings yield on businesses compounding earnings in the mid-to-high teens is more attractive than a 5% fixed coupon bond.
Q: Can you provide more color on the venture strategy? Is it more of a late-stage growth equity bent, and what happens after a portfolio company goes public? A: Bill Ackman ( Trades , Portfolio ) described Pershing Square Ventures as a broad spectrum vehicle, ranging from companies with several hundred million market caps to decacorns. Unlike traditional venture funds with long lockups and high fees, this will be a permanent capital vehicle. They plan to help companies through their full lifecycle, including going public, and retain the option to hold long-term. The vehicle will be seeded with investments so investors know what they're buying, and they expect it to trade well due to the scarcity of such opportunities in public markets.
Q: What are your specific plans to address the trading discount of PSUS to NAV? A: Bill Ackman ( Trades , Portfolio ) acknowledged the discount is "absurd" and a solvable problem. He attributed it to IPO allocation mistakes and a lack of demand creation. Plans include more aggressive marketing to financial advisers, highlighting that PSUS is the lowest-cost hedge fund in the world in a liquid NYSE format, now available at a 20% discount. He emphasized that future vehicles will be sufficiently differentiated (like Ventures) so investors can't replicate the portfolio themselves, which should support better trading values.
Q: Is there anything from a tail risk perspective that the portfolio is looking out for as a broader hedge currently? A: Ryan Israel explained that the asymmetric hedging strategy is episodic by design, targeting "black swan" events rather than short-term market declines. They spend several hours daily monitoring potential risks and have a library of several dozen hedge instruments. Currently, they have no hedges on, but are watching certain risks. Bill Ackman ( Trades , Portfolio ) clarified they are not trying to hedge a 10% market decline but rather fundamental factors like COVID or a financial crisis. They look for hedges that can return 5 to 10 times their money, ideally 20 to 100 times.
Q: Any updated outlook around capital returns and more specifically dividends over the near term? A: Bill Ackman ( Trades , Portfolio ) stated the dividend policy is to return substantially all free cash flow quarterly. The business requires minimal CapEx, with the main capital need being new fund launches. They plan to finance these commitments with investment-grade debt rather than building cash. Ryan Israel added that dividend distribution is the most likely form of capital return for the foreseeable future, given current market dynamics. Bill Ackman ( Trades , Portfolio ) noted that buybacks are not practical at this scale but wouldn't be shy if it were the best use of capital.
Q: How should we think about the resources Mark and David will have at their disposal to accelerate the opportunity set for Vantage, and what disclosure changes will you advise for Howard Hughes? A: Bill Ackman ( Trades , Portfolio ) expressed excitement about the "dream team" recruited for Vantage, including Mark and David Gansberg. The highest priority is monetizing Howard Hughes' real estate assets to deploy more capital into insurance, transforming it into a "modern-day Berkshire Hathaway." They are exploring transactions to accelerate capital transfer. Ryan Israel added that they created a supplement last quarter for sum-of-the-parts analysis, showing intrinsic value north of $100 per share, potentially exceeding $200 by 2030. They will provide quarterly disclosures for Vantage similar to a publicly traded insurer and annual updates on the business model evolution.
Q: How should the general public think about the difference between Pershing Square US and Pershing Square Holdings? A: Bill Ackman ( Trades , Portfolio ) explained that for US persons, PSH has unfavorable tax characteristics (PFIC status), making it unsuitable. PSUS has lower fees with no incentive fee and is US-listed. PSH trades at a wider discount, has an incentive fee, and lower management fee, with attractive low-cost leverage (~18% debt to assets at under 4% cost). He advised investors to consult tax advisers and make their own analysis, noting both should perform well over time.
Q: Can you clarify the current status of SPARC and how it relates to other investment opportunities? A: Bill Ackman ( Trades , Portfolio ) described SPARC as a Special Purpose Acquisition Rights Company, an efficient way for companies to go public without the negative attributes of a SPAC. Pershing Square backstops the vehicle, guaranteeing a fixed price and minimum capital. They have regular conversations with potential private companies and are seeing increased deal flow. The economics of SPARC are owned by Pershing Square funds, with warrants providing up to 5% of the target company. A successful deal would contribute to AUM growth and fee streams for Pershing Square Inc.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
