Pershing Square Holdings, founded by renowned investor Bill Ackman, is known for its unique investment strategy that combines concentrated portfolio management and activist investing. Ackman is one of the most famous and controversial activist investors in the world, known for high-profile battles such as the Carl Icahn vs. Bill Ackman Herbalife (HLF 0.45%) battle of 2016.
Regardless of how you feel about Pershing Square's profile or some of its high-profile fumbles, some of the returns on Ackman deals, such as his bet against mortgages during the 2007-09 global financial crisis, have yielded out-of-this-world returns.
Is it publicly traded?
Is Pershing Square stock publicly traded?
Pershing Square is not currently publicly traded in the United States. Pershing Square Capital Management operates as a private hedge fund, primarily serving institutional investors and family offices. While it has a publicly listed fund (Pershing Square Holdings) on the London Stock Exchange (LSE) and Euronext Amsterdam under the ticker symbol PSH, it has not yet been listed on a U.S. exchange. That being said, Pershing Square’s listing status in the U.S. could change in the near future.
IPO
When will Pershing Square IPO?
An initial public offering (IPO) for Pershing Square in the U.S. is anticipated to occur in 2025 or possibly 2026. Ackman is finalizing a roughly $1 billion investment round with the idea of taking Pershing Square public next year and plans to use $500 million of the funds raised to establish Pershing Square USA, a new investment portfolio that will be listed on the New York Stock Exchange (NYSE) and open to U.S. investors, including retail investors.
IPO
How to invest
How to buy Pershing Square stock
Buying stock on the LSE is slightly different than buying stock in the United States. Americans can buy stocks on the London Stock Exchange through international brokerages like Interactive Brokers (IBKR 3.46%), Charles Schwab (SCHW 0.04%), Fidelity, and TD Ameritrade.
The first thing to note is that transactions are conducted in British pounds (GBP), requiring currency conversion, which the brokerage typically handles for a fee. Although minuscule for your average retail investor, fees can add up. Investors also need to comply with two regulatory bodies: the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
You should also be aware of the tax regulations in the U.K. and how those apply to U.S.-based investors. Since the market hours are different in the U.K., trades might not be realized until the next trading day due to the time zone difference.
Follow these steps to buy Pershing Square stock:
Step 1: Open a brokerage account
The first step is to find a platform that will enable you to invest in Pershing Square Holdings. In most cases, the easiest way to buy stock in a publicly traded company is through an online brokerage account. Here's what to look for when you choose a broker:
- Commission-free trades: Many brokers offer commission-free trading, which can save you money on each transaction.
- Low or no minimum deposit: Many brokers have eliminated their minimum deposit requirement, making investing easier for everyone.
- User-friendly platform: Choose a brokerage with a platform that is easy to use and navigate.
- Research tools and resources: Access to educational resources, stock analysis tools, and customer support can be very helpful, especially for new investors.
Step 2: Figure out your budget
When you create a budget for investing in Pershing Square, you should evaluate several key factors, including your current financial situation, investment time frame, and risk tolerance.
A good approach is to diversify your portfolio, spreading investments across various industries and securities with differing risk profiles to mitigate risk. Also, consider whether you want to make a one-time investment or use a dollar-cost averaging strategy.
Consider whether your investment goals align with long-term growth or short-term gains. Long-term investors should focus more on Pershing Square's growth potential over all else.
Step 3: Do research
With any investment, knowledge is power, and the more data you can gather, the more prepared you are. Here are some steps to take:
- Look at the track record: Since its inception in 2004, Pershing Square Capital Management has achieved a compound annual return of approximately 16.5%. Compared to a 10% return for the S&P 500 over the same period, Pershing Square's results highlight its legitimacy. Fewer than 90% of actively managed funds actually beat the index, so the fact that Pershing Square has done so well speaks to its viability as an investment.
- Understand how activist investing works: Pershing Square is at the forefront of activist investing, where companies buy up enough shares to win board seats and make major changes. The idea has been framed as "shareholders' rights," but sometimes the funds are not exactly knights in shining armor to save retail shareholders. In some cases, active funds can focus on short-term gains at the expense of longer-term investors.
- Identify potential risks to Pershing Square: Although Pershing Square is known for its successful bets, it is not without risks. Factors such as market volatility, regulatory changes, and the performance of individual companies in its portfolio can affect its returns.
Step 4: Place an order
Once you've opened your brokerage account, made a budget, and done your due diligence, it's time to place an order. You'll still need to decide between a market order and a limit order. The Motley Fool recommends using market orders since they guarantee you buy your stock for the current price.
Should I invest?
Should I invest in Pershing Square?
Deciding whether to invest in Pershing Square depends on your personal circumstances and investment strategy. Here are some key points to consider:
When you might consider investing in Pershing Square:
- You believe in the power of activist investing.
If you support the concept of activist investing, where significant stakes are taken to push for strategic changes, Pershing Square is the poster child. Ackman's approach aims to unlock value in companies through active engagement, making it appealing to those who believe in this hands-on investment style. You might also like the fact that Pershing Square pushes for changes publicly, rather than behind closed doors. When Pershing Square has their IPO they will need to act on behalf of shareholders as well, so it gives retail investors a real part to play in changes made in Pershing Square's portfolio and activist investing strategy.
- You like Pershing Square's track record.
Pershing Square has demonstrated resilience and the ability to recover from market downturns, which has allowed its track record to speak for itself. The fund's various strategic maneuvers during challenging economic times, such as the COVID-19 pandemic, have showcased its capability to protect and grow investor capital, making it a favorite for those valuing proven crisis management.
- You want value transparency.
Pershing Square is known for its transparency and public disclosure of investment theses. Since Pershing Square is not yet publicly traded, this pre-IPO transparency will lend itself well to the regulatory scrutiny that Pershing Square will face after it goes public. This openness allows investors to stay informed about the fund's strategies and holdings, providing peace of mind and alignment with investors who champion great communication.
When you might avoid investing in Pershing Square:
- You prefer passive investing strategies, like tracking an index.
If your investment philosophy leans toward passive investing, Pershing Square's active, hands-on approach might not align with your strategy. The fund's activist methods involve significant intervention in portfolio companies, contrasting sharply with the passive investment approach of buying and holding diversified index funds.
- You dislike Bill Ackman.
Sometimes, even with great returns, you can't have people you dislike running the companies that you are investing in. Ackman is often criticized for everything from his hair to what many perceive as his self-importance and willingness to risk investors' money to fight battles against other Wall Street titans for an ego boost. If you view Ackman as an unlikeable character, that's one reason not to invest in Pershing Square.
- You prioritize ethical or socially responsible investing (ESG).
If your investment decisions are heavily influenced by environmental, social, and governance (ESG) criteria, Pershing Square's focus on financial performance and strategic changes might not align with your values. The fund's investments are driven by potential returns and strategic fit rather than ESG considerations. However, it's also crucial to note that ESG scores can be easily manipulated through tactics like greenwashing.
Profitability
Is Pershing Square profitable?
Yes, Pershing Square is profitable. As of 2024, Pershing Square Holdings Ltd. reported a strong financial performance with significant returns on its investments. The fund's profitability is evident from its solid track record, including a compound annual return of approximately 16.5% since its inception in 2004. This high level of performance is a result of strategic and often activist investments in various companies.
Dividends
Does Pershing Square pay a dividend?
Pershing Square Holdings Ltd. pays a dividend. As of 2024, the fund's annual dividend yield was approximately 1.07%. The most recent dividend payment was $0.1456 per share, scheduled for Dec. 13, 2024. The company has a history of maintaining and occasionally increasing its dividend payments, reflecting its commitment to returning capital to shareholders. Over the last five years, the average dividend yield has been around 1.39%, highlighting a consistent return to investors through dividends.
ETFs
ETFs with exposure or similar strategies to Pershing Square
Many ETFs and index funds track a specific index. Some ETFs with significant Pershing Square holdings include financial sector ETFs and hedge fund replication ETFs.
| ETF Ticker | ETF Name | Exposure to Pershing Square-Related Companies | Category | Expense Ratio |
|---|---|---|---|---|
| (NYSEMKT:HDG) | ProShares Hedge Replication ETF | Mimics the performance of hedge fund strategies, including activist investors like Pershing Square | Hedge Fund Replication | 0.95% |
| (NYSEMKT:QAI) | IQ Hedge Multi-Strategy Tracker ETF | Provides diversified exposure to multiple hedge fund strategies, including long/short equity and event-driven approaches similar to Pershing Square | Multi-Strategy | 0.77% |
| (NYSEMKT:GURU) | Global X Guru Index ETF | Tracks the top holdings of hedge funds, providing direct exposure to the equity investments made by prominent hedge funds such as Pershing Square | Hedge Fund Holdings | 0.75% |
| (NYSEMKT:ALFA) | AlphaClone Alternative Alpha ETF | Follows an index of hedge fund holdings that have shown high "alpha" potential, offering exposure to the same investments as hedge funds, including Pershing Square | Hedge Fund Holdings | 0.95% |
The bottom line on Pershing Square
Like any investment, buying or selling Pershing Square stock should be done in conjunction with a thorough analysis of both the investment target and the entire industry. Although Pershing Square has had its share of controversies, its track record speaks for itself. Its ability to weather multiple storms is seen as some of the most agile maneuvering in finance. If you believe in the "activist investor" model and are comfortable with the track record, then Pershing Square might be right up your alley.
Related investing topics
FAQ
FAQ: How to invest in Pershing Square
Is Pershing Square profitable?
Pershing Square has demonstrated strong profitability. Its unique investment strategy has yielded significant returns over the years, making it a well-regarded fund in the investment community.
Can anyone invest in Pershing Square?
Anyone can invest in Pershing Square Holdings Ltd. (PSH) through publicly traded shares. Investors can purchase shares of PSH on the London Stock Exchange (LSE) or Euronext Amsterdam, provided they have access to these markets through their brokerage accounts.
Is Pershing Square a good investment?
Whether Pershing Square is a good investment depends on individual investment goals and risk tolerance. Pershing Square has displayed a strong historical performance, with a compounded annual return of approximately 16.5% since its inception. However, as with any investment, it is important to consider potential risks.
Is Pershing Square publicly traded?
Yes, Pershing Square Holdings Ltd. is publicly traded. The fund is listed on the London Stock Exchange (LSE) and Euronext Amsterdam, allowing investors to buy and sell shares on these exchanges.
What is the stock symbol for Pershing Square?
The stock symbol for Pershing Square Holdings Ltd. is PSH on both the London Stock Exchange (LSE) and Euronext Amsterdam.
