Bill Ackman’s launching the “roadshow” to gin up interest for what he hopes will be a massive IPO for Pershing Square USA (PSUS), which will be the closed-end cousin of his Pershing Square Holdings fund that’s listed in London and Amsterdam (at PSH, and trades OTC at PSHZF in the US)… so we should see that fund go public well before the end of the year, though I haven’t seen a projected date yet.  And Pershing Square Holdings is my largest “fund” investment, so I’m certainly paying attention.

The goal is for Pershing Square USA to essentially follow the same strategy as Pershing Square Holdings, and in fact to have essentially the same portfolio in both funds — which means investing in 10-15 large cap companies where Ackman and his team see a mispricing opportunity in a high-quality large-cap company that should be able to grow and compound value for many years, and to hedge that portfolio with small but asymmetric macro bets (index puts, interest rates, energy prices, etc.) that occasionally pay off huge (and don’t cost all that much when they fail), while also leveraging those investments with a little debt.  Very little short-term trading, but generally adding one or two large positions a year and scaling out of one or two others.

Investors have an interesting judgement call to make, because the investment performance of Pershing Square Holdings has been very good since their “strategic reset” going into 2018, which essentially means that “it has been good since that time when it was terrible.”  Investors have done very well since the fund bottomed out and Pershing Square lost most of its traditional hedge fund investors in the wake of the Valeant Pharmaceuticals fiasco, (when Ackman went in way too big on a company that was just about to fall apart and reveal its shortcomings to the world)… and exceptionally well since 2020.  But it has been a weak investment for anyone who bought near the Pershing Square Holdings IPO in 2014, mostly because even though the investment performance of the fund itself recovered over time and has been solid, the share price did not follow — that publicly traded closed-end fund went from trading at net asset value (NAV) at the 2014 IPO and in the months following, or sometimes even at a small premium, to trading at a dramatic discount to NAV that has mostly ranged ...