No. of Recommendations: 1
" Should investors take up Ackman’s offer on the new fund? The terms are certainly superior to what they were two years ago. Ackman also has had a great record over the past seven years. He plans to run a concentrated portfolio of 12 to 15 of what the prospectus calls undervalued “large-capitalization growth companies.” Ackman may also make macro bets involving bonds, currencies, or commodities. Based on Ackman’s existing investments, Pershing Square USA could contain Alphabet
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Here are some of the problems. While Pershing Square USA could begin trading at a discount to its net asset value, shares of Ackman’s management company are supposed to offset those losses. The value of the bonus stock, however, is unclear. The fund will have a stiff annual fee of 2%, creating a hurdle for Ackman to beat the S&P 500 index and low-fee ETFs. Ackman’s management company is small relative to its many alt peers. It now runs about $16 billion in fee-paying fund assets. Even assuming a successful fund offering, the total would be $25 billion. Pershing Square might struggle to hold a $10 billion market value in that scenario, since that likely would be a big premium to peers based on revenue, earnings, and assets.
What’s more, investors have a ready alternative to the fund IPO. That comes in the form of Ackman’s main existing investment vehicle, Pershing Square Holdings
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, a $13 billion European-listed closed-end fund that trades in London and lightly in the U.S. under the ticker PSHZF. That fund is off to a tough start in 2026—it’s down 14% this year through March 10 based on its net asset value, against a drop of less than 1% for the S&P 500—after topping the benchmark index by about three percentage points in 2025. The fund has consistently traded at a 20%-plus discount to net asset value in recent years, and investors can buy it at a recent 23% discount to its NAV.
The European fund is taxed as a passive foreign investment company. Many U.S. investors avoid such funds because they see the tax treatment as onerous, says tax expert Robert Willens, but he doesn’t see it as a big negative. Investors buy master limited partnerships, and their tax treatment can be similar, he says.
Ultimately, the offering is a complex way for Ackman to reach U.S. investors and boost Pershing Square Inc.’s assets under management. Despite the bonus shares, investors are better off with the European shares—or simply waiting until the U.S. fund is trading at a potential discount before buying in."
https://www.barrons.com/articles/bill-ackman-persh... 