Bill Ackman can be seen as a divisive figure in the investing world. Never shy of the limelight, he’s had some incredible success (General Growth Properties, Chipotle, the infamous COVID $27M to $2B hedge) along with some famous failures (Herbalife short, Valeant, PSTH, and recently selling NFLX at the bottom).
Love him or hate him, Bill is undoubtedly a savvy investor. He’s has built a long term portfolio around a framework of as he says, “simple, predictable, free cash flow generative businesses with strong moats, excellent management, and without extrinsic risks they can’t control”.
According to Bloomberg, of the top 100 largest funds, his fund Pershing Square is the best performing closed end fund in the word the last 5 years.
Despite that success, Pershing Square (PSH.AS (Amsterdam exchange) or PSHZF) currently trades at a 34.5% discount to its Net Asset Value (NAV).
Bill discusses the discount to NAV at length in his semiannual shareholder letter, why he thinks it exists, and how he is highly focused on closing that gap. Pershing Square is already buying back a lot of its discounted stock each year, having purchased 22% of their shares outstanding since 2017, and working to attract large institutional investors.
I feel this is a very attractive opportunity for retail traders. You are getting the active management of Bill Ackman and his team, who have a portfolio of strong, stable, long term FCF generative businesses, with a 35% discount to the net asset value that Bill is actively working to close. I feel that over time, not only will the assets appreciate in value, but the NAV will close as well, giving you potentially more upside.
You can read all about Pershing Square and Bill’s thoughts on the NAV discount, as well as commentary on each of his holdings, in the semiannual letter (link below). Would love your thoughts and opinions on this opportunity.
His current portfolio consists of:
Lowes – $LOW
Resturant Brands Intl – $QSR
Chipotle – $CMG
Universal Music Group – $UMG
Hilton – $HLT
Howard Huges Corp – $HHC
Canadian Pacific Rail – $CP
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