Corner of Berkshire & Fairfax Message Board

General Category => Investment Ideas => Topic started by: giofranchi on February 10, 2015, 12:29:26 AM

Title: PSH.L - Pershing Square Holdings
Post by: giofranchi on February 10, 2015, 12:29:26 AM
Today I have used my cash reserve to invest in Pershing Square Holdings.

I think it has many characteristics that I like in this environment:

1) First of all I think Ackman has learnt an hard lesson about investing in low quality businesses... And from now on he will concentrate on businesses that generate steady free cash flow, with low or no debt. Given the overall environment, that's where I want to be invested too.

2) His activism is much like investing with a catalyst... Another thing I like and look for these days! Not only his targets generate healthy levels of fcf, but (if Ackman is successful) the market will also see new strategies that get implemented to further increase those levels of fcf, and will revalue those companies accordingly.

3) I like very much his way of concentrating capital in just 3-4 ideas each year: it gives him the time needed to pursue and implement the right changes, and gives me the possibility to follow and try to understand each major decision of his. If I find the thesis of his next very large investment too risky or too difficult to understand, hopefully I will be able to get out without losing much capital, and to watch from the sidelines.

4) With $18 billions of AUM (6.5 of which are now permanent capital) Ackman has the firepower to push for changes in any kind of medium and large cap companies. His universe of possible investments is huge, he is only 48, and therefore could go on compounding at high rates of return for many years to come.

5) The share price is trading around NAV, therefore I am not paying a premium due to Ackman's 2014 stellar performance.

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: moody202 on February 10, 2015, 02:56:16 AM
How would I buy this in US?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: abyli on February 10, 2015, 03:01:44 AM
Use IB, buy in IRA account. :)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: moody202 on February 10, 2015, 03:03:26 AM
Use IB, buy in IRA account. :)

why IRA?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: abyli on February 10, 2015, 03:11:42 AM
It is a foreign closed hedge fund. PSH is listed in Holland because it is illegal for hedge fund to go public in US. Now US has very complicated tax rules about buying foreign funds. Google keyword PFIC.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: handycap5 on February 10, 2015, 04:54:24 AM
could you explain a couple of things that confused me on PSH:
1) what are the fees and expenses the fund will pay?
2) how do the taxes work?

thanks, handy
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on February 10, 2015, 07:04:53 AM
The fees are lower than the other Pershing Square funds.  Like someone else mentioned, if you are US investor it is best to understand the PFIC rules and hold it in an IRA if your tax adviser says that works for you.

Everything you would want to know is in the prospectus - tax info on page 199, Fees on page 12:

http://pershingsquareholdings.com/media/2014/09/Prospectus-Dated-2-October-2014.pdf

The above homepage also has links to the weekly NAV reports.  It trades at a small discount to last reported NAV.

could you explain a couple of things that confused me on PSH:
1) what are the fees and expenses the fund will pay?
2) how do the taxes work?

thanks, handy
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on February 10, 2015, 07:13:45 AM
Handy,
Compensation is the one Ackman asks to any other client of his: I guess it should be the classic 2 and 20. His results net of fees and expenses imo justify such a generous compensation.

As far as taxes are concerned, I have held Third Point Offshore for two years and was very pleased with its fiscal regimen. PSH is based in Guennersey, just like TPOU, therefore I don't expect any difference.

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: merkhet on February 10, 2015, 07:16:11 AM
Today I have used my cash reserve to invest in Pershing Square Holdings.

I think it has many characteristics that I like in this environment:

1) First of all I think Ackman has learnt an hard lesson about investing in low quality businesses... And from now on he will concentrate on businesses that generate steady free cash flow, with low or no debt. Given the overall environment, that's where I want to be invested too.

2) His activism is much like investing with a catalyst... Another thing I like and look for these days! Not only his targets generate healthy levels of fcf, but (if Ackman is successful) the market will also see new strategies that get implemented to further increase those levels of fcf, and will revalue those companies accordingly.

3) I like very much his way of concentrating capital in just 3-4 ideas each year: it gives him the time needed to pursue and implement the right changes, and gives me the possibility to follow and try to understand each major decision of his. If I find the thesis of his next very large investment too risky or too difficult to understand, hopefully I will be able to get out without losing much capital, and to watch from the sidelines.

4) With $18 billions of AUM (6.5 of which are now permanent capital) Ackman has the firepower to push for changes in any kind of medium and large cap companies. His universe of possible investments is huge, he is only 48, and therefore could go on compounding at high rates of return for many years to come.

5) The share price is trading around NAV, therefore I am not paying a premium due to Ackman's 2014 stellar performance.

Gio

Unclear whether Ackman was merely talking his book, but in a Bloomberg Europe video, he mentioned that vehicles like this usually trade for 2x+ book value. If that's true, and he can continue his 20% CAGR, then this will be an incredible steal.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on February 10, 2015, 07:17:25 AM
The fees are lower than the other Pershing Square funds

Ok! Even better! :)

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on February 10, 2015, 07:22:52 AM
"Unclear whether Ackman was merely talking his book, but in a Bloomberg Europe video, he mentioned that vehicles like this usually trade for 2x+ book value. If that's true, and he can continue his 20% CAGR, then this will be an incredible steal."

What is he talking about?  TPOU is almost identical and trades at almost exactly NAV.  Most closed end funds trade at discounts.  The only thing he can point to is Berkshire at a few points in the distant past, but Berkshire had leverage from Float that PSH doesn't have.

It has traded at a persistent discount since the IPO.  I have purchased PSH several times when the discount was wide but a recent article closed the gap significantly.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: peter1234 on February 10, 2015, 07:27:10 AM
Quote
What is he talking about? 
What he is trying to say is that companies with ROE of 20%+ trade for 2x+ book value.
However, closed end funds usually do not trade like this.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on February 10, 2015, 07:35:56 AM
It has traded at a persistent discount since the IPO.  I have purchased PSH several times when the discount was wide but a recent article closed the gap significantly.

As I have tried to explain, I don't think about PSH as a vehicle to be traded in when the discount to NAV is large, and out when the discount has shrunk.
Though of course that could be one way to look at it! ;)

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on February 10, 2015, 07:44:19 AM
The argument that this should trade at 2x book because he has been shown to compound at 20% is ridiculous.  This vehicle will trade at 0.7-1.3x book for a long time and the performance will come as he improves book value.  If Ackman gets hit by a bus, the 20% ROE goes away.  This isn't some regular business with perpetual 20% returns.  Nevermind the harder it is to make 20% consistently in a low interest rate environment with tens of billions of capital.

Ackman is so frustrating.  I really like how he approaches the investment process, but then he gets promotional and emotional about things when the process should speak for itself.  Does he really think shareholders are so stupid to believe that line of 2x book for a closed end hedge fund?

That said I bought some PSH under $24 because of the discount to NAV and exposure to FNMA that I don't feel comfortable doing on my own. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: petec on February 10, 2015, 08:43:01 AM
This isn't some regular business with perpetual 20% returns. 


If you know of any companies with perpetual 20% returns please do let me know ;)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on February 10, 2015, 08:58:10 AM
Since we're talking about Return on Equity, there are several examples and they usually trade at big premiums to net worth.  Microsoft is the easiest example off the top of my head - http://ycharts.com/companies/MSFT/return_on_equity

Ackman really wants people to equate PSH with Berkshire but he has said he will continue with his current strategy of buying stakes in public companies.  He's not going to get an operating company multiple on book.  The present value of the fees would suggest a small discount is fair.

This isn't some regular business with perpetual 20% returns. 


If you know of any companies with perpetual 20% returns please do let me know ;)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Liberty on February 10, 2015, 09:17:49 AM
I expect Pershing to do well over the long term. Probably better than non-activist big funds, since they kind of auto-catalyze their investments.

Glad to see you deploying capital, Gio :)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on February 10, 2015, 11:59:49 AM
I expect Pershing to do well over the long term. Probably better than non-activist big funds, since they kind of auto-catalyze their investments.

I look at PSH more as an holding company than a fund.

It is true they don't have any operating business... But it is also true they concentrate their investments in just a few names they know very well and hold for the long term... To hold for the long term doesn't mean to hold "forever"... And that's why they don't have any wholly owned business.

Imo they hold an investment until they see the opportunity to implement changes in order to achieve outsized returns. Then they sell and go looking for the next business that is underperforming because of mismanagent.

It is not clear, to me at least, which vehicle is more valuable: an holding company with wholly owned businesses, or a vehicle which is built to do what PSH does. To have a permanent stream of cash is useful indeed, but, once the business has been "fixed", incremental return on capital cannot stay as high as when changes are successfully implemented. Selling and looking for the next business which needs the same treatment, might not be a bad idea after all. :)

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Liberty on February 10, 2015, 12:04:32 PM
I expect Pershing to do well over the long term. Probably better than non-activist big funds, since they kind of auto-catalyze their investments.

I look at PSH more as an holding company than a fund.

It is true they don't have any operating business... But it is also true they concentrate their investments in just a few names they know very well and hold for the long term... To hold for the long term doesn't mean to hold "forever"... And that's why they don't have any wholly owned business.

Imo they hold an investment until they see the opportunity to implement changes in order to achieve outsized returns. Then they sell and go looking for the next business that is underperforming because of mismanagent.

It not clear, to me at least, which vehicle is more valuable: an holding company with wholly owned businesses, or a vehicle which is built to do what PSH does. To have a permanent stream of cash is useful indeed, but, once the business has been "fixed" incremental return on capital cannot stay as high as when changes are successfully implemented. Selling and looking for the next business which needs the same treatment, might not be a bad idea after all. :)

Gio

That's certainly how Ackman has been selling it, and I tend to agree with him to a certain degree, though unlike a pure holding company, he does have non-permanent capital that can flee at the worst time, he's charging fees, and he's regulated as a hedge fund. That does make a difference.

When I made my comment about big funds, I was thinking of Fairholme (whether that's a fair comparison or not, they both are pretty huge), ie, big enough that it becomes harder to play in small and mid caps and move the needle.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on February 10, 2015, 12:13:29 PM
Liberty,
What you say is right of course!
But I don't see why what "non-permanent" capital does should affect "permanent" capital. After all they are invested through different vehicles, aren't they?

In other words PSH is not subject to redemptions.

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Liberty on February 10, 2015, 12:14:49 PM
Liberty,
What you say is right of course!
But I don't see why what "non-permanent" capital does should affect "permanent" capital. After all they are invested through different vehicles, aren't they?

In other words PSH is not subject to redemptions.

Gio

That's where the nomenclature gets confusing. I was talking about Pershing as a whole, sorry for the confusion.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: handycap5 on February 11, 2015, 10:14:45 AM
as a US owner, are you buying into low tax basis stock? is it similar to ruane cuniff where you buy into a large tax liability?

also, re: fees and expenses, i would love a full explanation. for instance, they are paying a promote for the zoetis idea, i'm sure this is not in the fees.

appreciate the groups thoughts.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: obtuse_investor on February 12, 2015, 07:12:56 PM
Congratulations Gio on your purchase. I think you will do very well.

Any Canadians here who have looked into or has purchased PSH shares?

I am seriously considering it but am not sure of the tax implications, if any.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: james22 on February 12, 2015, 08:46:07 PM
Introductory:

http://www.insidermonkey.com/blog/bill-ackman-talks-about-pershing-square-holdings-ltd-psh-ipo-likes-restaurant-brands-international-inc-qsr-had-plans-to-invest-in-tesco-plc-tsco-337738/

http://www.institutionalinvestor.com/inside-edge/3390303/pershing-square-ipo-great-for-ackman-but-investors-have-questions.html

Thanks for bringing to attention, Gio.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: mcliu on February 13, 2015, 07:05:34 AM
Why not just mimic his investments?

I mean his strategy is to take large activist positions in large publicly-traded companies in the U.S. or Canada. In most instances he would have to file 13-Fs to disclose his positions, so you're basically able to figure out what he's invested in through his filings. Even if the stock pops on his initial 13-F, his activist strategy usually requires a couple of years to play out, allowing you plenty of time to accumulate shares.. That way you're also saving 2/20 in management fees which is pretty substantial..

This is probably why it's unlikely that PSH will trade at 2x NAV. I mean, why pay a 2x the FMV of his holdings + 2/20 management fees, when you can purchase the holdings on the market for 1x NAV?

Also since there's no reinsurance business, it's not like PSH has access to low-cost leverage that's available like some of the other hedge fund vehicles GLRE or TPRE or BRK/FFH/MKL..
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on February 13, 2015, 07:28:11 AM
Why not just mimic his investments?

You might be perfectly right!
The strategy you suggest is simply not the one for me, but I understand it might work just fine.

By the way, I think that both GLRE and TPRE are very good investment vehicles. I have chosen PSH over them right now simply because with 48% of my portfolio invested in FFH, I have enough of insurance exposure! ;)

Cheers,

Gio

Title: Re: NL:PSH - Pershing Square Holdings
Post by: obtuse_investor on February 13, 2015, 08:40:09 AM
Why not just mimic his investments?

You're right, of course.
However, I must point out that Ackman does run a sizable short book as well that wouldn't be exposed via 13Fs.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Liberty on February 13, 2015, 08:41:28 AM
Why not just mimic his investments?

You're right, of course.
However, I must point out that Ackman does run a sizable short book as well that wouldn't be exposed via 13Fs.

Just short Herbalife and that's probably 95% of his shorts by value right there ;)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: wbr on February 13, 2015, 12:55:44 PM
Why not just mimic his investments?

I think often Ackman's involvement alone will cause a stock to spike. An extreme example would be Allergan where the price was $116 before he started buying and was above $160 once VRX and Ackman made it public. By being invested in his fund you can benefit from this instead of replicating his holdings once a large part of the gain was already made.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: magno111 on February 13, 2015, 01:05:15 PM
Why not just mimic his investments?

I think often Ackman's involvement alone will cause a stock to spike. An extreme example would be Allergan where the price was $116 before he started buying and was above $160 once VRX and Ackman made it public. By being invested in his fund you can benefit from this instead of replicating his holdings once a large part of the gain was already made.

In his last letter to investors he mentioned they usually buy short term options in advance of an activist campaing ( everyone knows how a stock pops when a famous activist appears), that enhance returns, and you can't replicate...
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on February 13, 2015, 01:13:26 PM
Why not just mimic his investments?

You're right, of course.
However, I must point out that Ackman does run a sizable short book as well that wouldn't be exposed via 13Fs.

Ackman does not run a "sizable" short book.

Pershing Square is a low gross exposure (usually like 100% gross) very long biased fund with only occasional shorts.

It's not a traditional long short fund that is like 130 by 70 with 20 or 30 shorts on at a time.

When he does short, he is far more concentrated than your average fund (because he is only short 1 or 2 things at a time, he can size em up) and he's very  public and long term about it (MBIA, Herbalife)


Title: Re: NL:PSH - Pershing Square Holdings
Post by: Haasje on February 13, 2015, 01:18:14 PM
Why not just mimic his investments?

I think often Ackman's involvement alone will cause a stock to spike. An extreme example would be Allergan where the price was $116 before he started buying and was above $160 once VRX and Ackman made it public. By being invested in his fund you can benefit from this instead of replicating his holdings once a large part of the gain was already made.

In his last letter to investors he mentioned they usually buy short term options in advance of an activist campaing ( everyone knows how a stock pops when a famous activist appears), that enhance returns, and you can't replicate...

That sounds so illegal :P
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Mephistopheles on February 13, 2015, 05:41:44 PM
Why not just mimic his investments?

I think often Ackman's involvement alone will cause a stock to spike. An extreme example would be Allergan where the price was $116 before he started buying and was above $160 once VRX and Ackman made it public. By being invested in his fund you can benefit from this instead of replicating his holdings once a large part of the gain was already made.

In his last letter to investors he mentioned they usually buy short term options in advance of an activist campaing ( everyone knows how a stock pops when a famous activist appears), that enhance returns, and you can't replicate...

That sounds so illegal :P

It does, but it's not illegal. There is no inside information involved. It's merely the market reacting to a famous investor taking a stake. I don't blame him either, because there are two sides of it: once they report their stake publicly, the stock shoots up and they miss out on buying more at the same low price. So buying options compensates for that in my opinion.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: mcliu on February 13, 2015, 06:14:58 PM
If their 13D/F report moves the market does that not count as material non-public information if they trade on it before it happens?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: obtuse_investor on February 13, 2015, 06:41:25 PM
Why not just mimic his investments?

You're right, of course.
However, I must point out that Ackman does run a sizable short book as well that wouldn't be exposed via 13Fs.

Ackman does not run a "sizable" short book.

Pershing Square is a low gross exposure (usually like 100% gross) very long biased fund with only occasional shorts.

It's not a traditional long short fund that is like 130 by 70 with 20 or 30 shorts on at a time.

When he does short, he is far more concentrated than your average fund (because he is only short 1 or 2 things at a time, he can size em up) and he's very  public and long term about it (MBIA, Herbalife)

You're right that it isn't sizable from the perspective of positions. The reason I used that adjective is because I recall him having a $1B short position for HLF, while his total AUM is only about $13B. I could be incorrect in recalling those numbers.

That is a large percentage if you're used to investing along BRK.A or MKL.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on February 14, 2015, 02:43:28 AM
Why not just mimic his investments?

I think often Ackman's involvement alone will cause a stock to spike. An extreme example would be Allergan where the price was $116 before he started buying and was above $160 once VRX and Ackman made it public. By being invested in his fund you can benefit from this instead of replicating his holdings once a large part of the gain was already made.

By the way: there are many studies which show how anyone could have achieved extraordinary investment returns copying Buffett's decisions after they had been disclosed to the public... Yet, I don't know of anyone who made lots of money that way, while I know many people (me included!) who made lots of money investing in Berkshire! ;)

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: james22 on February 15, 2015, 02:53:21 AM
How would I buy this in US?

OTCMKTS:PSHZF
Title: Re: NL:PSH - Pershing Square Holdings
Post by: magno111 on February 15, 2015, 04:32:26 PM
If their 13D/F report moves the market does that not count as material non-public information if they trade on it before it happens?

you aren't responsible for market craziness. Mr.Ackman has a reputation, that's why stocks move when he appears, if he stops delivering good results with activists campaigns, I am pretty sure the side effects of a 13D won't be the same.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on February 15, 2015, 05:10:38 PM
So if I knew that Ackman was going to take a position in a stock and that the result would likely be a rise in price, and proceeded to buy up options ahead of it wouldn't that be insider trading?  How is that any different than Ackman doing it?  He knows the market response and can't really say "oh it was just market craziness."

These insider trading laws are stupid.  They should just get rid of them or clean up these loopholes.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: adesigar on February 15, 2015, 06:25:04 PM
So if I knew that Ackman was going to take a position in a stock and that the result would likely be a rise in price, and proceeded to buy up options ahead of it wouldn't that be insider trading?  How is that any different than Ackman doing it?  He knows the market response and can't really say "oh it was just market craziness."

These insider trading laws are stupid.  They should just get rid of them or clean up these loopholes.

That's a dumb comparison. How do you say that Ackman knowing he himself is buying the stock is insider information? Should he buy it without knowing he is buying it? Should he tell his broker, go buy something but don't tell me what it is cause that would be insider information?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: jawn619 on February 15, 2015, 06:34:13 PM
From the SEC website.
Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security.

I think the 2 key things here are
-material nonpublic information(which Ackman had)
-a breach of fiduciary trust duty(which Ackman didn't have)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Liberty on February 15, 2015, 06:55:30 PM
So if I knew that Ackman was going to take a position in a stock and that the result would likely be a rise in price, and proceeded to buy up options ahead of it wouldn't that be insider trading?  How is that any different than Ackman doing it?  He knows the market response and can't really say "oh it was just market craziness."

These insider trading laws are stupid.  They should just get rid of them or clean up these loopholes.

That's a dumb comparison. How do you say that Ackman knowing he himself is buying the stock is insider information? Should he buy it without knowing he is buying it? Should he tell his broker, go buy something but don't tell me what it is cause that would be insider information?

Yeah, that's like saying Buffett shouldn't be able to buy stocks because when it becomes known that he's bought them, they usually go up (so he's insider-trading against himself?!).
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on February 15, 2015, 07:02:15 PM
I don't think you guys get how this is strange. On one hand you say Ackman has a strategy to buy up options ahead of his filing so he can profit from the market reaction. It's different to buy a stock knowing it might move when the announcement is made and ultimately has little impact on your end result. It's a totally different situation to buy short term options because you know of that impact on the holding.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on February 15, 2015, 07:09:04 PM
The best way I can think of this is as follows:

Would you feel right buying up options ahead of your announcement of taking a stake in a company that you know would push up the price of the shares?  For the sole purpose of selling it shortly after to "reduce the impact of copycats reducing your returns?"  Give me a break.

At least Buffett has the class to get an exemption from the SEC to build up a stake if need be.

You don't need the SEC to determine whether something is right or wrong. Even a judge in the AGN VRX saga said Ackman was seriously pushing the boundaries on what constitutes insider trading.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: oddballstocks on February 15, 2015, 09:28:36 PM
A small related rant.  When did "insider" become co-opted to mean "anything the SEC determines is unfair?" 

Let's say when I buy a stock and mention it the price shoots up like Ackman.  I buy options and stock hoping to profit from the price action.  How is this 'inside information?'  All I'm doing is trading the market, I know nothing more than anyone else.  Ex-ante I don't know for sure if the stock will rise, it's speculation.  This is clearly different than true insider trading where an insider might know about a merger, or earnings or some other significant material market event that causes the stock to appreciate or decline.  In retrospect we can always know if something worked or not, but no one truly knows for sure ahead of time, unless the information is truly inside info.  A CEO announcing a merger or sale knows there will be a material outcome, they might not know the magnitude, but they know there will be an impact.

Secondly what's the timeframe?  So Ackman buys a stock and options around a position and announces it and the price rises.  So suddenly this is 'inside', but what if the market falls and suddenly the stock trades below his purchase price.  Does the SEC re-measure or drop the case?  What's the time period?  As an outsider it seems arbitrary.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: mcliu on February 15, 2015, 09:43:44 PM
http://www.investopedia.com/exam-guide/cfa-level-1/ethics-standards/standard-nonpublic-information.asp

CFA Ethics:

Material versus Non-Material

No statutory definition of "materiality" is available, so it is up to courts that rule on insider trading cases to rule. These cases will often cite the market price impact of the released information to establish that it was indeed material. Say a dividend is cut in half and the shares fall 10%; it was clearly a material event. However, if a company announces a new branch office in Kansas, and the stock performs in line with the market following the announcement, it was a non-material event. An insider with knowledge of the Kansas venture would not be found criminally liable if there were a purchase of shares prior to the public announcement of the Kansas office.

Regarding Analyst Opinion on a Stock

Ask whether the information is material: i.e. will it have a market impact? If an influential Wall Street analyst is preparing to downgrade his or her investment opinion from a buy to a sell, and we know about it, that's very different from our neighborhood broker/dealer stating he doesn't like it anymore. In the first case, we are required to wait for public disclosure of the change in opinion; the second case requires no trading restrictions.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: oddballstocks on February 15, 2015, 10:18:50 PM

Ask whether the information is material: i.e. will it have a market impact? If an influential Wall Street analyst is preparing to downgrade his or her investment opinion from a buy to a sell, and we know about it, that's very different from our neighborhood broker/dealer stating he doesn't like it anymore. In the first case, we are required to wait for public disclosure of the change in opinion; the second case requires no trading restrictions.

So what or who decides the difference between an influential analyst vs non-influential?  A jury of our peers?  I can ask 100 "men on the street" and I'm guessing maybe one or two at most know who Ackman is.  By this is he influential if no one has heard of him besides financial geeks?

I understand the rules, no supposed unfair advantage.  Except the problem is by the very nature of the markets one side ALWAYS has an unfair advantage.  A person who works at any company always has an advantage against someone who doesn't.  So either you can't talk to anyone tangentially related to an investment or we just accept that some people have better/more information than others.  The reality is the markets seem to work like this already.  A guy like Ackman attracts a following because people believe he does more research or has better information compared to others.  He's floated a fund on this premise, anyone running a fund has floated something on this premise, that their information is better than others and they'll let investors go for a ride for a fee.  The SEC only cares about it once you're big or do something egregious enough that they can push through an easy case.

If a middle manager at a company talks to their brother-in-law at a BBQ saying they're worried about their job because of a plant closure that's inside info.  But if the rumor spreads throughout the office and suddenly everyone in town assumes this rumor is true it's not inside anymore.  So the difference seems to be the dissemination of a rumor.

Do I wish that management were trading against me? No. I accept that it happens.  Why is it when management buys stock on the open market this is considered a good signal?  It's because we presume they know something inside and they're acting on it.  That's legal somehow.  If I'm unknown and buying a stock I can tell my brother-in-law.  If I'm lucky enough to get on CNBC suddenly I can't talk to anyone anymore.  How is this different than the manager who has better information?

I'm pushing against a wave here.  All the CFA's (mcliu I'm sorry I presume) are pulling their hair out I'm sure.

Insider trading reminds me of football, nothing is sane, but if you've watched the game long enough it's understandable.  A catch isn't a catch until the ball is held to the ground and two feet are dragged and the player shows possession etc.  Two identical plays could be ruled differently on the whim of endless replays and ref judgement calls.  My sense is insider trading is the same, no sanity, no sense, but if you live in the system it's accepted.

Maybe it's a term thing.  Managers aren't trading on superior information, they're simply opening themselves up to be "cloned".
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on February 15, 2015, 10:28:01 PM
A small related rant.  When did "insider" become co-opted to mean "anything the SEC determines is unfair?" 

Let's say when I buy a stock and mention it the price shoots up like Ackman.  I buy options and stock hoping to profit from the price action.  How is this 'inside information?'  All I'm doing is trading the market, I know nothing more than anyone else.  Ex-ante I don't know for sure if the stock will rise, it's speculation.  This is clearly different than true insider trading where an insider might know about a merger, or earnings or some other significant material market event that causes the stock to appreciate or decline.  In retrospect we can always know if something worked or not, but no one truly knows for sure ahead of time, unless the information is truly inside info.  A CEO announcing a merger or sale knows there will be a material outcome, they might not know the magnitude, but they know there will be an impact.

Secondly what's the timeframe?  So Ackman buys a stock and options around a position and announces it and the price rises.  So suddenly this is 'inside', but what if the market falls and suddenly the stock trades below his purchase price.  Does the SEC re-measure or drop the case?  What's the time period?  As an outsider it seems arbitrary.

If Ackman takes a stake in a company like SHLD, isn't a reasonable assumption that the stock will shoot up quickly?  Even if the stock declines he would still be trading on non-public information.  It has been shown in other insider trading cases that they actually lost money but were still charged for insider trading.  Winning or losing has no say in whether it is proper.

As for the timeframe, it is like how Ackman and VRX almost got nailed, and still might, when they worked together to build a position in a company with the likely intention to make a tender offer.  The intention is part of the timeframe issue and speaks to the heart of the strategy.  If the intention is to trade ahead of your filing to turn a short-term profit to hedge the "risk" of not making enough profit, well I don't see how that is kosher. 

Obviously the laws are vague.  Power to them for taking advantage of it like the way people take advantage of the tax code.  I personally think its garbage that something like that is fine, but to each their own.

As far is it impacts PSH, I could see how this will make it hard to emulate Ackman's strategy.  But I still think it should trade near or below book value.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: petec on February 16, 2015, 04:22:30 AM
Since we're talking about Return on Equity, there are several examples and they usually trade at big premiums to net worth.  Microsoft is the easiest example off the top of my head - http://ycharts.com/companies/MSFT/return_on_equity

Ackman really wants people to equate PSH with Berkshire but he has said he will continue with his current strategy of buying stakes in public companies.  He's not going to get an operating company multiple on book.  The present value of the fees would suggest a small discount is fair.

This isn't some regular business with perpetual 20% returns. 


If you know of any companies with perpetual 20% returns please do let me know ;)

I know what RoE is.   I was quibbling, rather pedantically, with the use of the word 'perpetual'.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: ni-co on February 16, 2015, 05:14:36 AM
There will come a time when we will laugh at the fact that you could "insider trade" analyst recommendations. What's the news here? You almost deserve being ripped off if you buy a stock because of such a recommendation. This is, by the way, completely incompatible with EMH since the analyst only uses publicly available information.

With regard to the options trading: Where's the difference to Ackman simply buying a few stocks more on margin and then selling them into the market? I don't understand the issue here. If he overdid it the market reaction would change. Nobody has the right to buy shares "pre Ackman announcement". It's like Odballstocks says, he just takes a couple of bps from the people who clone him. Shouldn't he be allowed to do that?

And what's the reason behind disclosure for investment/hedge funds, anyway? Wouldn't it suffice to report the crossing of certain hurdles that matter to the company because the fund can now influence a company's destiny (like 10%, 25%, 50% of the voting rights)? That's how it's handled in Germany and it works just fine. I don't mind stealing ideas from great investors but I don't think that this kind of disclosure is necessary.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Mephistopheles on February 16, 2015, 08:40:47 AM
A small related rant.  When did "insider" become co-opted to mean "anything the SEC determines is unfair?" 

Let's say when I buy a stock and mention it the price shoots up like Ackman.  I buy options and stock hoping to profit from the price action.  How is this 'inside information?'  All I'm doing is trading the market, I know nothing more than anyone else.  Ex-ante I don't know for sure if the stock will rise, it's speculation.  This is clearly different than true insider trading where an insider might know about a merger, or earnings or some other significant material market event that causes the stock to appreciate or decline.  In retrospect we can always know if something worked or not, but no one truly knows for sure ahead of time, unless the information is truly inside info.  A CEO announcing a merger or sale knows there will be a material outcome, they might not know the magnitude, but they know there will be an impact.

Secondly what's the timeframe?  So Ackman buys a stock and options around a position and announces it and the price rises.  So suddenly this is 'inside', but what if the market falls and suddenly the stock trades below his purchase price.  Does the SEC re-measure or drop the case?  What's the time period?  As an outsider it seems arbitrary.

If Ackman takes a stake in a company like SHLD, isn't a reasonable assumption that the stock will shoot up quickly?  Even if the stock declines he would still be trading on non-public information.  It has been shown in other insider trading cases that they actually lost money but were still charged for insider trading.  Winning or losing has no say in whether it is proper.

As for the timeframe, it is like how Ackman and VRX almost got nailed, and still might, when they worked together to build a position in a company with the likely intention to make a tender offer.  The intention is part of the timeframe issue and speaks to the heart of the strategy.  If the intention is to trade ahead of your filing to turn a short-term profit to hedge the "risk" of not making enough profit, well I don't see how that is kosher. 

Obviously the laws are vague.  Power to them for taking advantage of it like the way people take advantage of the tax code.  I personally think its garbage that something like that is fine, but to each their own.

As far is it impacts PSH, I could see how this will make it hard to emulate Ackman's strategy.  But I still think it should trade near or below book value.

The key, as others have stated, is that it's not inside information about Sears or whatever company it is that he's buying. He doesn't have access to any more information than you do. You (investors) just so happen to respect his opinion so much, so you drive up the share price. That's not his problem.

If it were illegal, then there would be no way any respected investor would be able to build a stake that's reported, because he'd be breaking the law.

While it's not insider trading, if he were to quickly sell a position that he went public with, I can see why it would be considered market manipulation. But that's if he had the intent of manipulating the stock price for personal gain.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Haasje on February 16, 2015, 09:31:16 AM
I'm not coming from a particular moral perspective but just curious about the insider trading rules which are not exactly intuïtive to grasp. Ok, so if I understand it correctly:

It's legal for Ackman to buy short term options with the expectation of his 13-F causing a spike in the stock price

BUT

it's not legal if Ackman(or anyone who has the reputation for a lift) doesn't really have a new investment idea near the end of the quarter but buys a stock position solely to profit from the spike after his 13-F with options and sells his position quickly afterwards.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on March 05, 2015, 02:58:36 AM
February 2015 Performance and NAV/share at $28.17

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on March 05, 2015, 04:12:17 AM
Ackman is already up 6.8% net of fees on 2015, which is undoubtedly very good. I know many are skeptical because he is fully invested in an overheated stock market… But it is precisely in this situation that I like investing with a catalyst (his activist strategies), because it tends to shorten the time required for value to be both created and recognized.

Of course, if you want to stay in cash and not to be invested, no catalyst will change your mind. But for those who want to own great businesses no matter what the market is doing I think PSH should be at least taken into consideration. ;)

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: wellmont on March 05, 2015, 06:08:33 AM
how does this work? I bought some of this at IB and it traded in USD. I was expecting to have to convert currency. anybody understand the mechanics?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on March 05, 2015, 06:27:38 AM
how does this work? I bought some of this at IB and it traded in USD. I was expecting to have to convert currency. anybody understand the mechanics?

What do you mean exactly? PSH’s assets are USD denominated, just like its stock price… Aren’t they?

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Ham Hockers on March 05, 2015, 06:36:26 AM
how does this work? I bought some of this at IB and it traded in USD. I was expecting to have to convert currency. anybody understand the mechanics?

It's Euronext listed but denominated in dollars.

Plus, I'm sure you bought the U.S. OTC ticker, which would already be in dollars anyway even if the underlying weren't.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: wellmont on March 05, 2015, 07:42:08 AM
interesting. but I actually bought the psh. didn't realize there was an otc. thanks.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Ham Hockers on March 05, 2015, 07:59:08 AM
interesting. but I actually bought the psh. didn't realize there was an otc. thanks.

Yeah. Most U.S. individuals would probably see PSHZF or something like that at their broker.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: wellmont on March 05, 2015, 08:29:05 AM
tried to trade the otc at schwab and it didn't work. so they are not set up to trade it online yet. even though I can get a quote.  >:(
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on March 05, 2015, 08:45:17 AM
Be sure that you know how to deal with PFIC if you buy this in taxable account in US.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: fareastwarriors on March 05, 2015, 10:20:43 AM
US persons holding PFIC stock through tax-exempt organizations or accounts will be exempt from Form 8621 filing requirements


http://www.ey.com/Publication/vwLUAssets/US_persons_holding_PFIC_stock_through_tax-exempt_organizations_or_accounts_will_be_exempt_from_Form_8621_filing_requirements/$FILE/2014US_CM4364_US%20persons%20holding%20PFIC%20stock%20through%20tax-exempt%20orgs%20to%20be%20exempt%20from%20Form%208621%20filing%20reqs.pdf (http://www.ey.com/Publication/vwLUAssets/US_persons_holding_PFIC_stock_through_tax-exempt_organizations_or_accounts_will_be_exempt_from_Form_8621_filing_requirements/$FILE/2014US_CM4364_US%20persons%20holding%20PFIC%20stock%20through%20tax-exempt%20orgs%20to%20be%20exempt%20from%20Form%208621%20filing%20reqs.pdf)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: bobp on March 05, 2015, 01:30:10 PM
How about in an IRA? Any issues? Thanks.

Be sure that you know how to deal with PFIC if you buy this in taxable account in US.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on March 10, 2015, 06:25:39 AM
Quote
Amsterdam, 9 Mar. 2015 //‐ Pershing Square Holdings, Ltd. (ticker: PSH:NA) announced today
a new position in Valeant Pharmaceuticals International, Inc. (ticker: NYSE: VRX) representing
approximately 16.9% of the PSH portfolio (based on the closing NAV of PSH and the closing
share price of VRX on Friday, 6 March 2015).

Pershing Square Capital Management, L.P., the investment manager for Pershing Square
Holdings, Ltd., announced that various funds it manages have purchased 16,473,933 shares of
Valeant Pharmaceuticals International, Inc., representing 4.9% of Valeant.


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on March 13, 2015, 07:08:46 AM

http://www.marketwatch.com/story/herbalifes-stock-pares-gains-after-ackman-says-he-wasnt-contacted-by-fbi-2015-03-13


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on March 17, 2015, 03:57:33 AM
Pershing Square Responds to The Wall Street Journal Herbalife Article


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: petec on March 24, 2015, 02:48:16 AM
So if I knew that Ackman was going to take a position in a stock and that the result would likely be a rise in price, and proceeded to buy up options ahead of it wouldn't that be insider trading?  How is that any different than Ackman doing it?  He knows the market response and can't really say "oh it was just market craziness."

These insider trading laws are stupid.  They should just get rid of them or clean up these loopholes.

That's a dumb comparison. How do you say that Ackman knowing he himself is buying the stock is insider information? Should he buy it without knowing he is buying it? Should he tell his broker, go buy something but don't tell me what it is cause that would be insider information?

Excellent post!   I love this idea.

I can't see what's wrong with buying stock and options when opening a position.   Surely that's a natural expression of a positive view?   If the stock then pops when his name is associated with it, so be it.

Another way of looking at it is that he is not in possession of material non-public information.   What he is in possession of is his buy thesis, and he is acting on it.   His knowledge that he is about to buy cannot possible be considered material non-public information: if it was, he wouldn't be allowed to buy stock, let alone options.   Which would obviously be ridiculous.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: petec on March 24, 2015, 02:54:26 AM
Liberty,
What you say is right of course!
But I don't see why what "non-permanent" capital does should affect "permanent" capital. After all they are invested through different vehicles, aren't they?

In other words PSH is not subject to redemptions.

Gio

Gio,

I assume that Ackman invests all his funds roughly similarly and pools votes for his activism.   So a withdrawal of non-permanent capital could, in theory at least, affect his influence over his investments.

Pete
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on March 24, 2015, 02:58:03 AM
Gio,

I assume that Ackman invests all his funds roughly similarly and pools votes for his activism.   So a withdrawal of non-permanent capital could, in theory at least, affect his influence over his investments.

Pete

Yes! Of course you are right!

By the way, I have just bought more this morning. ;)

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: petec on March 24, 2015, 03:17:30 AM
I don't think anyone posted a breakdown of the fees so here is my reading of it:

Base fee is 1.5% of NAV before the performance fee is paid.

Performance fee is 16% of gains above the previous highest year-end NAV and 0% if they fail to exceed that mark.

However, the 16% is reduced by $1 for every $1 paid in performance fees in the same period by Pershing's other funds, namely PSLP, PS2LP, PSI, and (at their discretion) other funds they may launch in the future.   These funds totalled $9.9bn in AUM when the IPO prospectus was written and they typically pay a 20% performance fee, not 16%.

In their recent performance letter they say that they believe this fee shelter will lead to the performance fee being under 10%.   The arrangement cannot cause the performance fee to fall below zero, but if it would do so then the unused fee shelter dollars can be carried forward to the next period.

Clearly the listed company gets a better deal than the other funds.   I am interested as to why.   I wonder if this was intended to encourage holders of the other funds into the listed vehicle (this would seem to reduce fees to Ackman, but would increase his permanent capital).   Perhaps the fee shelter arrangement is to compensate holders of the listed company for perceived conflicts of interest.   Or perhaps they were just told that a flat 20% performance fee is too high for a closed end fund (it is certainly markedly above UK investment trust fees).

Title: Re: NL:PSH - Pershing Square Holdings
Post by: jay21 on March 24, 2015, 04:46:18 AM
Petec - my guess is:

Its an incentive for permanent capital. Imagine investing in the IPO vs his Hf directly.  In the IPO you cant withdraw your money, you can sell it on the 2nd mkt but not necessarily at NAV, and you pay a lower fee. Investing directly in the HF, you can withdraw at NAV (probably with a little bit of a lockout) and you pay a higher fee.

His investor base is probably institutions that care about being able to get their money out at NAV so they will pay a higher fee for the ability to do so.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: petec on March 24, 2015, 07:12:11 AM
Gio,

I assume that Ackman invests all his funds roughly similarly and pools votes for his activism.   So a withdrawal of non-permanent capital could, in theory at least, affect his influence over his investments.

Pete

Yes! Of course you are right!

By the way, I have just bought more this morning. ;)

Cheers,

Gio

And I have just joined you!
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on March 24, 2015, 07:28:58 AM
And I have just joined you!

This, I hope, is going be a VERY long term investment for me.

Ackman is just 48, and already is a self-made billionaire. He does something I would never be able to replicate myself. And he does it very competently! Moreover, I understand it quite well and like it very much.

Biglari is the same for me. He is even younger, and already manages operating businesses too, which give him predictable and meaningful cash flow… but, alas, as you very well know by now, he is more difficult to judge!

I will stay invested with both Ackman and Biglari as long as results are more than satisfactory. The day results deteriorate, and the blame is clearly to be put on Ackman and/or Biglari (not on Mr. Market!), I will part ways with them. Period.

I hope that day never comes. But, if it does, I am prepared. ;)

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Liberty on March 24, 2015, 08:06:28 AM
Probably the first time ever that Ackman has been compared to Bilgari.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on March 24, 2015, 08:40:50 AM
Probably the first time ever that Ackman has been compared to Bilgari.

Why? They are both activist investors, run concentrated portfolios, like the same kind of businesses (S n S, Burger King), they both look for securing permanent capital, etc.
I can see many similarities.

Of course, Biglari is also much more controversial than Ackman…

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Liberty on March 24, 2015, 09:08:29 AM
Probably the first time ever that Ackman has been compared to Bilgari.

Why? They are both activist investors, run concentrated portfolios, like the same kind of businesses (S n S, Burger King), they both look for securing permanent capital, etc.
I can see many similarities.

Of course, Biglari is also much more controversial than Ackman…

Gio

Just a guess. Have you ever seen them compared before?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: muscleman on March 24, 2015, 09:21:04 AM
Gio,

I assume that Ackman invests all his funds roughly similarly and pools votes for his activism.   So a withdrawal of non-permanent capital could, in theory at least, affect his influence over his investments.

Pete



Yes! Of course you are right!

By the way, I have just bought more this morning. ;)

Cheers,

Gio

And I have just joined you!

Are you not afraid of the hassle of PFIC tax filings? I sold because of that. Turbo tax does not support that and it will be a pain in the ass to do each year.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: petec on March 24, 2015, 10:02:11 AM
Ummm...enlighten me?   As a UK investor in a Netherlands stock in a tax-protected account I'm hoping I'm OK!   What is PFIC?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: fareastwarriors on March 24, 2015, 10:10:02 AM
Gio,

I assume that Ackman invests all his funds roughly similarly and pools votes for his activism.   So a withdrawal of non-permanent capital could, in theory at least, affect his influence over his investments.

Pete



Yes! Of course you are right!

By the way, I have just bought more this morning. ;)

Cheers,

Gio

And I have just joined you!

Are you not afraid of the hassle of PFIC tax filings? I sold because of that. Turbo tax does not support that and it will be a pain in the ass to do each year.

According to this piece by E&Y, you should be okay if you purchase this in an IRA.


US persons holding PFIC stock through tax-exempt organizations or accounts will be exempt from Form 8621 filing requirements


http://www.ey.com/Publication/vwLUAssets/US_persons_holding_PFIC_stock_through_tax-exempt_organizations_or_accounts_will_be_exempt_from_Form_8621_filing_requirements/$FILE/2014US_CM4364_US%20persons%20holding%20PFIC%20stock%20through%20tax-exempt%20orgs%20to%20be%20exempt%20from%20Form%208621%20filing%20reqs.pdf (http://www.ey.com/Publication/vwLUAssets/US_persons_holding_PFIC_stock_through_tax-exempt_organizations_or_accounts_will_be_exempt_from_Form_8621_filing_requirements/$FILE/2014US_CM4364_US%20persons%20holding%20PFIC%20stock%20through%20tax-exempt%20orgs%20to%20be%20exempt%20from%20Form%208621%20filing%20reqs.pdf)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: muscleman on March 24, 2015, 12:50:48 PM
Ummm...enlighten me?   As a UK investor in a Netherlands stock in a tax-protected account I'm hoping I'm OK!   What is PFIC?

PFIC is a us specific tax law. You are ok as a UK investor.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: obtuse_investor on March 24, 2015, 01:14:23 PM
Makes sense...

What about a non-American (eg Canadian) buying PSH in American OTC market?

Buying otc is easy and cheaper than buying in Amsterdam.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: obtuse_investor on March 24, 2015, 06:55:00 PM
Annual Report for 2014 has been posted: http://pershingsquareholdings.com/media/2014/09/PSH-Annual-Report.pdf

Title: Re: NL:PSH - Pershing Square Holdings
Post by: dcollon on March 27, 2015, 08:07:50 AM
Vanity Fair Article with Ackman

http://www.vanityfair.com/news/2015/03/bill-ackman-herbalife-marty-lipton
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on April 01, 2015, 01:16:22 AM
Quote
Pershing Square remains focused on healthcare • 1:42 PM
Douglas W. House, SA News Ed...

Even after his big win with Allergan, Bill Ackman's Pershing Square maintains significant exposure (~50%) to the healthcare sector. In a recent regulatory filing, Pershing disclosed a 19.5M share stake in Valeant Pharmaceuticals (VRX -0.2%) valued at ~$3.83B, making it the largest position in its equity portfolio. It also has a 41.8M share stake in Zoetis (ZTS -0.2%) valued at almost $2B.
In case you were wondering, Pershing is also maintaining its short position in Herbalife (HLF -0.9%).


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: elevensecsrt4 on April 01, 2015, 05:58:54 AM
I started reading links above that piqued my interest in Ackman which I have more or less followed since LUK invested a small sum in the target fund he had back years ago. Just curious as to where you guys are holding shares. I understand IRAs are suited better because of tax purposes but like a above comment,  My broker doesn't recognize the security PSHZF on the OTC market.

Thanks

Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on April 01, 2015, 06:08:03 AM
Interactive Brokers has no problem with the Amsterdam shares.  Haven't tried anywhere else.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: james22 on April 01, 2015, 10:09:59 AM
Vanguard recognizes PSHZF.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: fareastwarriors on April 01, 2015, 10:17:10 AM
E-trade works too.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on April 02, 2015, 06:55:37 AM
Pershing Square: Herbalife Operates In Violation of China's Direct Selling and Pyramid Sales Laws
Pershing Square responds to The Wall Street Journal article about Herbalife in China



Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on April 03, 2015, 02:19:40 AM
March 2015 Monthly Report


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: obtuse_investor on April 09, 2015, 05:16:57 AM
News Release to help out the US based shareholders

http://pershingsquareholdings.com/media/2015/04/PFIC-Press-Release.pdf

Quote
Pershing Square Holdings, Ltd.  (“PSH”) U.S.  Shareholders Tax
Reporting Information (PFICs) Amsterdam, April 8, 2015 // - Pershing
Square Capital Management, L.P.  (“Pershing Square”) today released
the following statement: PSH will use reasonable efforts to provide to
self - identified U.S.  shareholders of PSH for the 2014 calendar
year, on a confidential basis only, information necessary for such a
shareholder to satisfy its U.S.  federal income tax filing
obligations, including such information necessary to make qualified
electing fund (QEF) elections under the U.S.  tax rules for Passive
Foreign Investment Companies (PFICs).  Shareholders who wish to
receive this confidential information should provide their contact
details to Pershing Square’s Investor Relations department at the
contact details below.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Aurelius on April 28, 2015, 07:22:14 AM
http://pershingsquareholdings.com/media/2014/09/2015-European-Investor-Meeting-Presentation.pdf
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on April 28, 2015, 07:48:14 AM
http://pershingsquareholdings.com/media/2014/09/2015-European-Investor-Meeting-Presentation.pdf

Thank you for posting this one! :)

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: james22 on April 28, 2015, 09:04:07 PM
Goal: Market price at premium to NAV

Result: Currently trading at 5% discount to NAV
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on April 29, 2015, 12:39:26 AM
Goal: Market price at premium to NAV

Result: Currently trading at 5% discount to NAV


That is the one thing they cannot control, but we can take advantage of! ;)

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Aurelius on April 29, 2015, 12:59:50 AM
You are very welcome Gio!  :)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: obtuse_investor on April 30, 2015, 03:13:30 AM
Personally, I do not like to see any management commenting about their stock's price. Stating a goal that the stock should sell at a premium makes me very concerned about their motives.

Anyway, here is Pershing's Price/NAV (based on weekly data they publish)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on April 30, 2015, 04:16:45 AM
Personally, I do not like to see any management commenting about their stock's price. Stating a goal that the stock should sell at a premium makes me very concerned about their motives.

Buffett has said many times he likes BRK shares to trade around FV. That’s what I think Ackman means.

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: rpadebet on April 30, 2015, 05:43:10 AM
Personally, I do not like to see any management commenting about their stock's price. Stating a goal that the stock should sell at a premium makes me very concerned about their motives.

Buffett has said many times he likes BRK shares to trade around FV. That’s what I think Ackman means.

Cheers,

Gio

Can someone explain what is the logic behind "it should trade at a premium"?
Does the NAV account for the taxes yet to be paid on the profitable positions?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Liberty on April 30, 2015, 05:59:12 AM
I think Ackman is just trying to make it look better for those who bought at IPO, so that next time he wants to raise capital investors won't be reticent. He event mentioned something close to that on an interview that he did with the BBC (iirc) not to long after IPO.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on April 30, 2015, 06:00:52 AM
Can someone explain what is the logic behind "it should trade at a premium"?
Does the NAV account for the taxes yet to be paid on the profitable positions?

There is a section in the most recent AR titled “Our Strategy’s Structural and Competitive Advantages”. I think that section explains quite well why Ackman believes PSH should trade at a premium to NAV. If he is right or wrong, I cannot tell…

Capital gains are recognized as earnings, though taxes in Guernsey are almost negligible.

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on May 04, 2015, 07:54:32 AM
Seifi got right on that stock drop last week -

http://www.sec.gov/Archives/edgar/data/2969/000122520815010865/xslF345X03/doc4.xml
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on May 04, 2015, 07:58:04 AM
Seifi got right on that stock drop last week -

Sorry... But who is Seifi?

Thanks,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on May 04, 2015, 08:03:45 AM
Seifi is the CEO of Air Products, a major holding of your Pershing Square fund.

Seifi got right on that stock drop last week -

Sorry... But who is Seifi?

Thanks,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on May 04, 2015, 08:10:37 AM
Seifi is the CEO of Air Products, a major holding of your Pershing Square fund.

Ah! Ok! Now I have understood.

Thank you,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on May 04, 2015, 11:13:15 PM
Quote
PSH will host its quarterly investor conference call on 18 May 2015 at 15:00 GMT. During the call, Bill Ackman and the other members of the Pershing Square investment team will address questions e-mailed by investors to ir@persq.com.

Any question for Bill Ackman?

Quote
Bill Ackman presented at the Sohn Investment Conference today in New York City. The presentation will be available on Tuesday, 5 May 2015 at 18:00 Central European Time (12:00 PM Eastern Daylight Time) at http://pershingsquareholdings.com/media/2014/09/Ira-Sohn-2015-Presentation.pdf.

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on May 05, 2015, 07:58:45 AM
Currently http://pershingsquareholdings.com/media/2014/09/Ira-Sohn-2015-Presentation.pdf link is broken.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on May 05, 2015, 08:04:45 AM
Currently http://pershingsquareholdings.com/media/2014/09/Ira-Sohn-2015-Presentation.pdf link is broken.

I think it will be published at 18:00 Central European Time.

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on May 06, 2015, 12:49:29 AM
Please, find the presentation in attachment.

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on May 06, 2015, 08:17:03 AM
Forbes has a piece on Ackman and Howard Hughes Corp -

http://www.forbes.com/sites/antoinegara/2015/05/06/bill-ackman-baby-buffett-howard-hughes/
Title: Re: NL:PSH - Pershing Square Holdings
Post by: original mungerville on May 06, 2015, 09:12:05 AM
Please, find the presentation in attachment.

Cheers,

Gio

I just wanted to note that I posted a link with this presentation on the Valeant thread as Ackman provides a valuation of Valeant in the presentation starting on page 14 and it would be great to discuss that portion of the presentation on the Valeant thread. I have some questions there re some of his assumptions...
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on May 18, 2015, 08:18:57 AM
Conference call is going on now -  http://pershingsquareholdings.com/
Title: Re: NL:PSH - Pershing Square Holdings
Post by: merkhet on May 18, 2015, 08:43:14 AM
Sounds like they're sinking 15% of their capital into something that is around a $50 billion cap. Noted that it will be a few months before they will have to disclose.

$18B AUM x 15% = $2.7B position
@ 5% threshold that's around $54B
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on May 18, 2015, 08:57:54 AM
My guess is MON. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: wbr on May 18, 2015, 10:45:48 AM
My guess would be KRFT given that they like 3G and platforms. Heinz deal was announced towards the end of the quarter, so it would make sense that they started building a position in April.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on May 18, 2015, 11:06:21 AM
KRFT after the whole deal is done will be a lot more than $50 billion but that is possible.  The valuation seemed pretty high when I last looked at it.

I thought MON because it fits into work Ackman or his analysts have done on PAH and ZTS.  A high quality business that fits into a growing population with higher quality food needs.  At the same time there could be some room for activist investing since they have underperformed and capital allocation of late has been poor (like Syngenta bid with a lot of undervalued stock).

Plus it would tie Ackman's "save the world" thesis together by owning the company that every consumer hates and gives our children cancer (Roundup or whatever) while at the same time crusading to kill Herbalife to save the hispanics.  It would just make my day to see him go activist on Monsanto.

We shall see in a few months....
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on May 18, 2015, 06:25:02 PM
I have no idea if this is the one he is buying, but he did do an awkward "no comment at this time" when one of the Q&A questions was to get his thoughts on the KRFT-HNZ tie-up...  Personally, I started a DRIP with the company's plan administrator (wells fargo) the morning of the merger announcement, as this could be a nice platform for 3g to run for a long time and you are starting with a large special dividend and a high ongoing yield after that.  A good set-and-forget investment for some future child's benefit.

My guess would be KRFT given that they like 3G and platforms. Heinz deal was announced towards the end of the quarter, so it would make sense that they started building a position in April.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Phaceliacapital on May 18, 2015, 11:22:24 PM
Don't forget the tax some of us would have to pay on that special dividend..
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on May 18, 2015, 11:37:29 PM
It's not as simple as that for US taxpayers at least.  If I pay $82 for KRFT and receive $16.50 in cash and 65.50 in ex-div NewKRFT-HNZ stock (day 1) I don't owe any tax.

From the recent filing:
"For U.S. federal income tax purposes, the special dividend, the merger and the subsequent merger should be treated as a single integrated transaction. As a result, both the Kraft Heinz common stock and the special dividend should be treated as received in exchange for shares of Kraft common stock pursuant to a transaction qualifying as a reorganization for U.S. federal income tax purposes. A Kraft shareholder who exchanges his or her shares of Kraft common stock for shares of Kraft Heinz common stock pursuant to the merger and receives cash in the special dividend will recognize gain, but will not recognize any loss, for U.S. federal income tax purposes. The amount of gain recognized will equal the smaller of (i) the amount of cash received in the special dividend and (ii) the excess, if any, of (x) the amount of cash received in the special dividend and the fair market value of the Kraft Heinz common stock received in the merger (determined at the effective time of the merger) over (y) the Kraft shareholder’s tax basis in the shares of Kraft common stock surrendered in the merger."


Don't forget the tax some of us would have to pay on that special dividend..
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on May 19, 2015, 12:35:00 AM
Q1 2015 Interim Management Statement


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Phaceliacapital on May 19, 2015, 05:07:14 AM
Is there a transcript?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on June 03, 2015, 12:48:40 AM
May 2015 Performance Report


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on June 03, 2015, 05:46:14 AM
Pershing Square has 21.7% of Martin Franklin's Nomad Holdings Ltd. - frozen food consolidator

http://www.bloomberg.com/news/articles/2015-06-03/nomad-said-to-be-in-talks-to-acquire-frozen-food-producer-findus

(Third Point also disclosed 6.8%)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on June 03, 2015, 05:51:06 AM
Pershing Square has 21.7% of Martin Franklin's Nomad Holdings Ltd. - frozen food consolidator

http://www.bloomberg.com/news/articles/2015-06-03/nomad-said-to-be-in-talks-to-acquire-frozen-food-producer-findus

Thank you! :)

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on June 18, 2015, 08:56:08 AM
just fyi - Euronext introduced options on PSH with expiry out to 12 months, american style, usd:

http://finchannel.com/index.php/business/markets-and-securities/item/45477-euronext-introduces-equity-options-on-pershing-square-holdings
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on June 25, 2015, 07:12:39 AM
PSH sold $1 Billion in 7 year bonds at 5.5%.  More ideas than capital I guess.

http://pershingsquareholdings.com/media/2015/06/PSH-Pricing-Press-Release.pdf
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on June 25, 2015, 07:49:37 AM
PSH sold $1 Billion in 7 year bonds at 5.5%.  More ideas than capital I guess.

Or also trying to take advantage of a very low cost of money? ;)

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on June 25, 2015, 07:58:55 AM
I think he said on a conference call that the bond issue is to add size for his big target that will be announced in a month or so.  5.5% for 7 years isn't particularly cheap money - but it's more permanent than a margin loan.  Makes me think the large target is an activist position and not a 3G type investment where he doesn't want to change much.  Whatever the target is, it's likely bigger than $50 Billion MC.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Haasje on June 25, 2015, 11:37:59 AM
>$50B? How much does he have available including the bond raise?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on June 25, 2015, 11:41:17 AM
I was implying that the target company has a market cap higher than $50 Billion.  He probably has $22 Billion or so available across the funds plus whatever additional leverage he wants to employ.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on June 25, 2015, 12:59:57 PM
Something's up with Zoetis, looks like a VRX bid is the rumor
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Phaceliacapital on June 25, 2015, 11:57:04 PM
Come on, Zoetis looks expensive on any measure :D
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on July 03, 2015, 12:30:49 AM
June 2015 Performance Report


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: GFRhodes on July 16, 2015, 07:42:28 PM
Gio and others, thanks for introducing this very interesting idea. 

Just wondering what you think about the structure of the fees? 

I have Buffett in mind:  when he transitioned investors from the partnerships to "permanent capital" in BRK, he stopped charging a performance fee and instead took a nominal salary and put almost all his net worth in the stock.  It was perfect alignment. 

I know Ackman is offering PSH shareholders a fee at least one fifth lower than his other funds... but imagine for a second this was any other company instead of a hedge fund:  how would you feel reading a proxy statement with these terms?

Please don't get me wrong.  I'm intrigued by the idea of Pershing 2.0 and recognise that historic performance net of fees has been exceptional.  I'm just not sure how I would feel about this structure five years down the line when PSH looks more like a holding company and less like a portfolio.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on July 17, 2015, 12:31:22 AM
Just wondering what you think about the structure of the fees? 

Please, take a look at the discussion about Nomad Foods, if you are interested in knowing my view on compensation.

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on July 17, 2015, 04:32:11 AM
http://www.thestreet.com/story/13165392/1/what-activist-hedge-funds-are-and-how-you-can-benefit.html

http://www.thestreet.com/story/13218727/1/what-activist-hedge-funds-are-part-2--picking-the-best-strategies.html?utm_content=buffer3c83d&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on July 22, 2015, 12:40:07 AM
Activist principles at play: Ackman

http://video.cnbc.com/gallery/?video=3000397760&play=1


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: muscleman on July 22, 2015, 09:29:25 AM
Activist principles at play: Ackman

http://video.cnbc.com/gallery/?video=3000397760&play=1


Gio

Jim Crammer on the same stage with Bill Ackman? OMG.......That's hilarious!
Title: Re: NL:PSH - Pershing Square Holdings
Post by: dcollon on July 31, 2015, 06:21:54 AM
Full video of Peltz and Ackman

http://www.gurufocus.com/news/349864/the-full-interview-from-delivering-alpha-with-nelson-peltz-and-bill-ackman
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on August 06, 2015, 12:01:54 AM
July 2015 Performance Report


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on August 06, 2015, 01:14:32 AM
Activist Ackman Takes $5.5 Billion Stake in Snacks Giant Mondelez

William Ackman thinks Oreo maker needs to cut costs, grow revenue, or sell to rival like Kraft Heinz

http://www.wsj.com/articles/activist-takes-5-5-billion-stake-in-snacks-giant-mondelez-1438825313


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on August 06, 2015, 01:25:18 AM
This is interesting imo! Who knows?... He might already be in talk with 3G Capital!

Is he trying to replicate with 3G Capital what he did with Valeant?... We will see! ;)

Cheers

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on August 06, 2015, 01:31:20 AM
Also:

Ackman’s Investment Is Latest Jolt for Mondelez

Maker of Oreos, Triscuit crackers stumbled amid a bumpy year of activism, restructuring

http://www.wsj.com/articles/ackmans-investment-is-latest-jolt-for-mondelez-1438826576?mod=e2tw


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on August 06, 2015, 01:37:27 AM
http://www.marketwatch.com/story/ackman-takes-55-billion-stake-in-oreo-maker-2015-08-06


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Phaceliacapital on August 06, 2015, 02:32:20 AM
Hedge fund FMCG playbook:

1) Take stake (maybe board seat)
2) Implement zero based
3) Fail to implement zero based properly
4) Sell to 3G

Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on August 06, 2015, 05:47:50 AM
Pershing Square to File 13D Disclosing 7.5% Stake in Mondelez International, Inc.


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Grey512 on August 11, 2015, 04:05:40 AM
I admire Ackman greatly, but I am concerned with this latest move for Mondelez.

My perception is that Irene Rosenfeld (MDLZ's CEO) is a (very) tough cookie and a skilled operator. I see limited MDLZ price upside and a limited actual opportunity for a corporate event. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: petec on August 12, 2015, 04:44:33 AM
Ackman's letters refer to sometimes protecting the portfolio by spending a little money on derivatives that would pay off big in a crash or other rare market move.

Does anyone know if these positions are disclosed/known?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: sampr01 on August 12, 2015, 09:40:03 AM
Are you Jeff Ubben?. Jeff posted exact same on twitter


I admire Ackman greatly, but I am concerned with this latest move for Mondelez.

My perception is that Irene Rosenfeld (MDLZ's CEO) is a (very) tough cookie and a skilled operator. I see limited MDLZ price upside and a limited actual opportunity for a corporate event.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: merkhet on August 12, 2015, 10:02:51 AM
Are you Jeff Ubben?. Jeff posted exact same on twitter


I admire Ackman greatly, but I am concerned with this latest move for Mondelez.

My perception is that Irene Rosenfeld (MDLZ's CEO) is a (very) tough cookie and a skilled operator. I see limited MDLZ price upside and a limited actual opportunity for a corporate event.

Yes, he is the Jeff Ubben on twitter. No, the Jeff Ubben on twitter is not the actual Jeff Ubben from ValueAct.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Grey512 on August 12, 2015, 10:10:23 AM
Are you Jeff Ubben?. Jeff posted exact same on twitter


I admire Ackman greatly, but I am concerned with this latest move for Mondelez.

My perception is that Irene Rosenfeld (MDLZ's CEO) is a (very) tough cookie and a skilled operator. I see limited MDLZ price upside and a limited actual opportunity for a corporate event.

I am not Jeff Ubben, and I did not post that on Twitter, honestly (I don't even have Twitter). But I am a fan of Jeffrey Ubben / ValueAct! Either (i) this is a "1 in a bajillion" kind of coincidence that Jeffrey Ubben picked the exact same words, or (ii) Jeffrey Ubben is periodically on these boards, saw my message, liked how I worded it, and just copy pasted the first sentence into Twitter, or (iii) someone on COBF (not me!) runs a fake Jeff Ubben Twitter account and copy-pasted the first sentence of my post.

Repeat - I did not post that on Twitter.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: merkhet on August 12, 2015, 10:22:41 AM
Oops my mistake. That's super weird though, because he copied and pasted multiple of your posts onto twitter. (And the twitter profile of that guy specifically states that he is not Jeff Ubben from Value Act.) Including your recent sale of Fiat....
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Grey512 on August 12, 2015, 10:24:33 AM
Oops my mistake. That's super weird though, because he copied and pasted multiple of your posts onto twitter. (And the twitter profile of that guy specifically states that he is not Jeff Ubben from Value Act.) Including your recent sale of Fiat....

That's just unreal... I don't know whether I should be flattered or creeped out.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: jay21 on August 12, 2015, 10:41:08 AM
Oops my mistake. That's super weird though, because he copied and pasted multiple of your posts onto twitter. (And the twitter profile of that guy specifically states that he is not Jeff Ubben from Value Act.) Including your recent sale of Fiat....

That's just unreal... I don't know whether I should be flattered or creeped out.

did the same thing with your FCAU cmts: https://twitter.com/jeffubben/status/631081293783171072
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Grey512 on August 12, 2015, 10:50:17 AM
Oops my mistake. That's super weird though, because he copied and pasted multiple of your posts onto twitter. (And the twitter profile of that guy specifically states that he is not Jeff Ubben from Value Act.) Including your recent sale of Fiat....

That's just unreal... I don't know whether I should be flattered or creeped out.

did the same thing with your FCAU cmts: https://twitter.com/jeffubben/status/631081293783171072
Oh I know. I've now gone through that Twitter feed's posts for the past few days.

I posted both of those comments on two separate Investment Ideas threads. I think whoever runs that Twitter profile just browsed the Investment Ideas section liked those two posts and appropriated them for Twitter. I like to believe that this is a coincidence and that I am not special enough to be stalked!
Title: Re: NL:PSH - Pershing Square Holdings
Post by: SI on September 01, 2015, 12:54:33 PM
I run a separate account strategy and was wondering if any US investor went through with buying this directly in accounts that were not IRAs. If so, can you speak to the complexity of the process in client accounts if you get the confidential information PSH offered in April? Can I provide information to US custodians or does it have to go out to every CPA of every end client?

Thanks.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Wilson-TPC on September 01, 2015, 11:44:09 PM
That's not the REAL Jeff Ubben fyi.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: johnny on September 02, 2015, 09:25:40 AM
I do not fully understand implications of holding PSH in non-IRA accounts. I went over the tax part of the prospectus a while ago, but clearly something went over my head because it didn't trigger any concerns...

Is there a page that goes over what one should be concerned about here? Sorry for the noobish question.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on September 02, 2015, 11:40:13 AM
PSH is pretty certainly a PFIC https://en.wikipedia.org/wiki/Passive_foreign_investment_company
Have fun dealing with PFIC requirements.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: johnny on September 05, 2015, 03:59:43 AM
Feel real dumb for missing that; thanks!
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on September 09, 2015, 12:31:46 AM
http://www.valuewalk.com/2015/09/bill-ackman-china/99999/


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on September 09, 2015, 05:40:02 AM
Herbalife Launches Second Attack on Bill Ackman

http://www.foxbusiness.com/markets/2015/09/09/herbalife-launches-second-attack-on-bill-ackman/?intcmp=perspectives-horizontal


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on September 09, 2015, 05:47:41 AM
Herbalife activist investor Bill Ackman's unprecedented catalytic crusade

http://fortune.com/2015/09/09/herbalife-bill-ackman/


Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: ccplz on September 09, 2015, 10:06:41 AM
Is it necessary to post just one link every time?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: dcollon on September 09, 2015, 11:55:57 AM
Thanks for posting the article Gio.   
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Mephistopheles on September 09, 2015, 01:04:53 PM
Thanks Gio!
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on September 10, 2015, 12:31:40 AM
Thanks Gio!

Thanks for posting the article Gio.

My pleasure! :)

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on September 11, 2015, 05:46:35 AM
Bill Ackman: Stocks are pretty cheap; Disagree With Tepper

http://www.valuewalk.com/2015/09/bill-ackman-stocks-are-pretty-cheap-disagree-with-tepper/

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: phil_Buffett on September 11, 2015, 05:49:11 AM
thanks gio for all the links :)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on September 11, 2015, 06:15:36 AM
thanks gio for all the links :)

You are welcome! ;)

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Phaceliacapital on September 11, 2015, 07:15:32 AM
A lot of recent clips, summary:

- HLF still a fraud and still convinced
- Wants to sell MDLZ to KHC in 12 to 18 months
- Shortselling has benefits (lumber liquidators, enron, .. exemples)
- CSX leadership problems (interesting opportunity for CP)

Edit: with links http://www.cnbc.com/2015/09/11/bill-ackman-im-more-bullish-on-the-markets-than-david-tepper.html
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on September 15, 2015, 08:24:52 AM
Ackman's side-by-side comparison of Vemma and Herbalife

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on September 16, 2015, 02:25:26 PM
Hedgie family offices: http://www.bloomberg.com/news/articles/2015-09-16/inside-these-hedge-funds-quiet-family-affairs-for-the-boss
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kirkomi on September 17, 2015, 01:25:28 AM
How much of the NL:PSH does Bill Ackman personally hold ?

I did not find the relevant figure on any of the documents I read.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on September 17, 2015, 11:28:41 PM
Ackman Target Air Products & Chemicals Inc. Announces Spin-Off Of Materials Technologies Business

http://www.valuewalk.com/2015/09/ackman-target-air-products-chemicals-inc-announces-spin-off-of-materials-technologies-business/?utm_source=mailchimp&utm_medium=email&utm_campaign=EMAIL_DAILY&utm_content=quick_link

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on September 18, 2015, 04:44:52 AM
Bethany McLean, Bill Ackman Talk GSE Reform With Charlie Rose

http://www.valuewalk.com/2015/09/bethany-mclean-bill-ackman-talk-gse-reform-with-charlie-rose/

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: mg0516 on October 01, 2015, 11:20:29 AM
FYI, you cannot buy in ERISA or IRA's.  Both are prohibited.  You need to buy in a taxable account and file the QEF election.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Mephistopheles on October 01, 2015, 12:00:16 PM
I own shares in an IRA
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on October 02, 2015, 06:45:25 AM
A lot of volatility in NAV.  Down from a high of $29.27 to $23.06.  It's probably lower today as well. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: leeway on October 02, 2015, 07:31:17 AM
http://www.bloomberg.com/news/articles/2015-10-02/ackman-einhorn-lead-hedge-funds-on-track-to-rival-2008-losses
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Liberty on October 06, 2015, 04:06:29 PM
If anyone was curious to hear what Ackman said on Bloomberg today, here's the video:

http://www.bloomberg.com/news/videos/2015-10-06/influencer-interview-bill-ackman

From memory, he talks about GE, 3G, Heinz, VRX, Mike Bloomberg running for president, and some other things I can't remember at the moment.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on October 06, 2015, 10:02:50 PM
Edit: I am proud about the success of capitalism where such outstanding company as Sprout is recognized and acquired by such outstanding company as Valeant. Carry on.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on October 07, 2015, 12:30:58 AM
If anyone was curious to hear what Ackman said on Bloomberg today, here's the video:

http://www.bloomberg.com/news/videos/2015-10-06/influencer-interview-bill-ackman

From memory, he talks about GE, 3G, Heinz, VRX, Mike Bloomberg running for president, and some other things I can't remember at the moment.

I think my view of the pharma and biotech industry is perfectly in line with his. Of course, I also agree with all he had to say about VRX.
A good interview imo.

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: mg0516 on October 07, 2015, 09:31:08 AM
If you call IR and read the filings you'll discover that, although your broker may allow you to buy in an IRA...it is technically not allowed.  Not sure about their recourse...just a heads up.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Grey512 on October 07, 2015, 11:02:29 AM
If anyone was curious to hear what Ackman said on Bloomberg today, here's the video:

http://www.bloomberg.com/news/videos/2015-10-06/influencer-interview-bill-ackman

From memory, he talks about GE, 3G, Heinz, VRX, Mike Bloomberg running for president, and some other things I can't remember at the moment.

I have watched this video.
Curious to hear your thoughts.

Near the beginning of the interview, the host asks Ackman about the recent turbulence (with the barely concealed innuendo that Pershing Square took big hits in August and September). Ackman's response was kinda fluffy, with "people sell the the wrong things", "price movements get exaggerated", "we invest in businesses that are extremely robust", etc. The elephant in the room, IMO, is that a lot of the things on the long side in the Pershing portfolio were expensive, prior to the recent turbulence. Even after the market and those stocks (e.g. Zoetis, Mondelez) correcting 8-10%, Pershing's long picks are STILL expensive, IMO. The Pershing portfolio looks far from bulletproof in this choppy environment. I admire Ackman a lot so I do hope that he has a decent cash balance to pounce and recover the lost performance.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: obtuse_investor on October 07, 2015, 06:30:54 PM
John Hempton (famous short seller) now has a thing for Pershing Square.

See his recent post: http://brontecapital.blogspot.com.au/2015/10/pershing-square-modifies-their.html

He has been tweeting regarding VRX, Ackman and Pershing lately. See: https://twitter.com/John_Hempton
Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on October 22, 2015, 12:13:38 AM
Anyone has any thoughts on PSH at the current level given the VRX drama?

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Phaceliacapital on October 22, 2015, 01:24:18 AM
Good question, I actually think he is still positive on his VRX bet taking his AGN gains into account..
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Grey512 on October 22, 2015, 03:36:08 AM
Buying into PSH today means you are also buying into HHC, GGP, Zoetis, all of which (in my humble opinion) are trading at stretched valuations...
Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on October 22, 2015, 06:03:27 AM
Buying into PSH today means you are also buying into HHC, GGP, Zoetis, all of which (in my humble opinion) are trading at stretched valuations...

Would you mind elaborating a little?

For example, HHC is overvalued because?

Are you suggesting most of the PSH holdings are expensive, or most of the market are expensive?

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Grey512 on October 22, 2015, 08:33:07 AM
HHC - large multiple of tangible book value, incomprehensible cash-flow statement. Though I have not sharpened my pencil on that one. Similar story with GGP.
Zoetis  - 1-2% FCF yield.
Mondelez - expensive even if you assume massive cost cuts.

etc etc.

Regarding your last point: I agree with both statements. I.e. I think PSH holdings are expensive, and I think the market is also expensive. But not all of the market. E.g. in my opinion, funds such as Wedgewood, Greenlight, Abrams or Eminence have found some reasonable value on the long side.

On a tangent: am I the only one worried that Ackman's success and fame has messed with his head a little bit? Massive bets, massive concentration. Portfolio holdings sharing common risks (i.e. leverage fueling platform growth - VRX, PAH, AGN - check; leverage fueling high real estate values - HHC, GGP - check).  Massive bet on Mike Pearson. And so on. If Ackman blows up this year (or the next), people will look back and say "that was damn obvious".


Title: Re: NL:PSH - Pershing Square Holdings
Post by: Grey512 on October 22, 2015, 08:39:08 AM
I should also point out that I tend to stay away from "asset plays" and that automatically meant that I have not invested in RE-related stocks unless they reliably spat out high cash flow yields that are already there or will shortly commence (e.g. next year). For that reason, I've stayed away from Sears, and for that reason, I see Pershing Square's real estate investments as too expensive today. I hope that clarifies that a little bit.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on October 22, 2015, 07:45:54 PM
Hi Grey,

Some good points there - thank you.

I agree Ackman is taking more risk given his concentration and dependence on certain types of management. Nonetheless his method worked in the past and he's now going through a downdraft. It's probably a bit early to form conclusions. Some managers you cited such as Wedgewood and Einhorn haven't performed that well either.

My point is there is really no rule in investment. It comes down the exercising of judgment. Even using a same method, some do well and some don't. Those who do well generally have performed sometimes and failed some other times.

On your focus on cash flow being already there. Nothing wrong with that. But on the other hand once you see it, everyone does it too.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Grey512 on October 23, 2015, 03:54:10 AM
There are some things to like about PSH such as Allergan. But still, my worry is that ever-growing AuM and ever-growing attention of the investor community along with ever-growing competition has resulted in Ackman (more frequently) making bets that have a more modest margin of safety compared to his prior behaviour. He did swing and miss occasionally (JC Penney) but for some reason his current holdings "feel" different than some of his older ones (McDonalds, Procter & Gamble, etc).

Re visible cash-flows: agreed. But sometimes the pendulum can swing too far the other way towards either incredibly complex theses or ideas where the return comes not from the cash-flow but from massive growth hopes or a hope that someone is going to come in and pay a lot for some "asset" (despite that asset not generating any cash flow). The big money is probably made somewhere "in the middle" - it's just likely that I do not have the sufficient analytical edge and therefore I play closer to the 'simple', cash-flow rich side of the spectrum.

And BTW, I believe the last time we saw aggressive theses / aggressive assumptions (circa 2006-2007) routinely used to make concentrated bets, it was a harbinger of massive market volatility.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gamecock-YT on October 23, 2015, 07:16:42 AM
Ackman getting hit again as the PAH CEO is retiring. Stock is down ~20%.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on October 23, 2015, 07:21:17 AM
Life is unpredictable. I am sure Ackman will learn a lesson and apply it. So should we.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: abitofvalue on October 23, 2015, 08:03:36 PM
Wow Ackman almost certainly top-ticked when to go public.  Good thing he did and has some permanent capital because the volatility / downturn in his fund the last few weeks is going to be pretty dramatic.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: doughishere on November 04, 2015, 09:52:26 PM
Posted this on the VRX website...


Ackman will digest this. You can't keep him down. People keep equating this to "salad oil" Scandal. They are wrong. This may be his "Salomon Brothers" moment. Pershing Square shares are at discount. Get them while there's a fire sale. Put them in your retirement account. You be an "Ackman Millionare" some day

You can quote me on that.

From Carol Lumis circa 1997:

Quote
(FORTUNE Magazine) – As Sanford I. Weill, 64, the dealmaking CEO of Travelers Group, steps up to his biggest acquisition ever--the purchase of Salomon Inc. for $9 billion--a famous Wall Street figure, Warren E. Buffett, 67, steps out of Salomon. His days there began almost precisely a decade ago, in the early fall of 1987, when his company, Berkshire Hathaway, became Salomon's largest shareholder and he moved in as a director. But that was training-wheels stuff, nothing to the high-wire unicycle act that came later: Buffett was physically, emotionally, and really at Salomon for nine months in 1991 and 1992, when the firm's trading illegalities created a giant sucking sound that brought him in to run the place.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: plato1976 on November 04, 2015, 10:35:28 PM
Posted this on the VRX website...

Which broker can still buy PSH?
seems IB is no longer supporting buying b/c of clearing issues



///////////////////////////////////////////////////////////////////////

Ackman will digest this. You can't keep him down. People keep equating this to "salad oil" Scandal. They are wrong. This may be his "Salomon Brothers" moment. Pershing Square shares are at discount. Get them while there's a fire sale. Put them in your retirement account. You be an "Ackman Millionare" some day



You can quote me on that.

From Carol Lumis circa 1997:

Quote
(FORTUNE Magazine) – As Sanford I. Weill, 64, the dealmaking CEO of Travelers Group, steps up to his biggest acquisition ever--the purchase of Salomon Inc. for $9 billion--a famous Wall Street figure, Warren E. Buffett, 67, steps out of Salomon. His days there began almost precisely a decade ago, in the early fall of 1987, when his company, Berkshire Hathaway, became Salomon's largest shareholder and he moved in as a director. But that was training-wheels stuff, nothing to the high-wire unicycle act that came later: Buffett was physically, emotionally, and really at Salomon for nine months in 1991 and 1992, when the firm's trading illegalities created a giant sucking sound that brought him in to run the place.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Spekulatius on November 06, 2015, 05:35:59 PM
HHC - large multiple of tangible book value, incomprehensible cash-flow statement. Though I have not sharpened my pencil on that one. Similar story with GGP.
Zoetis  - 1-2% FCF yield.
Mondelez - expensive even if you assume massive cost cuts.

etc etc.

Regarding your last point: I agree with both statements. I.e. I think PSH holdings are expensive, and I think the market is also expensive. But not all of the market. E.g. in my opinion, funds such as Wedgewood, Greenlight, Abrams or Eminence have found some reasonable value on the long side.

On a tangent: am I the only one worried that Ackman's success and fame has messed with his head a little bit? Massive bets, massive concentration. Portfolio holdings sharing common risks (i.e. leverage fueling platform growth - VRX, PAH, AGN - check; leverage fueling high real estate values - HHC, GGP - check).  Massive bet on Mike Pearson. And so on. If Ackman blows up this year (or the next), people will look back and say "that was damn obvious".

Agreed, but the biggest issue for me is that Ackman is ethically challenged. Just look at the old history of Gotham partners and Gotham Golf. He drove his first fund into the ditch and my guess is that he will do it again.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on November 06, 2015, 07:41:53 PM
Agreed, but the biggest issue for me is that Ackman is ethically challenged. Just look at the old history of Gotham partners and Gotham Golf. He drove his first fund into the ditch and my guess is that he will do it again.

Hi, would you mind telling us what he did and how he drove his first fund into the ditch?

Title: Re: NL:PSH - Pershing Square Holdings
Post by: johnny on November 06, 2015, 09:04:13 PM
I think the basic story is his old fund had a huge position in a private golf course business that was not doing well, and Ackman cooked up a merger between GolfCo and some other portfolio company to try and save things. This was contested by a minority or pref shareholder in OtherCo, and then they got killed by redemptions.

AFAIK, there's no smoking gun that the attempted merger was actually ethically challenged, but it is the sort of thing that sort of looks bad, especially given that it seems to be a deal that his fund depended on (so there is a bit more plausibility to the idea that he was trying to force a deal that wasn't in everybody's interest).
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Spekulatius on November 07, 2015, 04:08:19 AM
Gotham Golf was a huge holding of Gotham Partners, losing money and going bankrupt. Gotham partners than was gaining control of another real estate entity that was cash Rich and made an attempt to merge them against the will of the other owners. It indeed was a holder of preferred stock of CashRichCo that was suing and gaining enough support from the bankruptcy judge to block the merger. Gotham Golf failed and Gotham Partners reputation went with it no the fund went downhill.

The attempted merger was a clear attempt to disown minority and debt holders and I find that very ethically challenged. FWIW, I know this story from someone (message board acquaintance) who held the preferred stock at that time and was involved in the lawsuit - not that it matters.

Ackman seems like such a nice guy, but given enough money involved, he will roll over people, if it is to his advantage. That is why I take pleasure, when he gets screwed over by obviously smarter folks,  like with the HLF short investment. He makes bold bets and some of them work out spectacularly well and some of them go bust spectacularly. In some cases, it seems to me that his research is clearly lacking, given the size of his bets. VRX seems such a case, where he got in late, HLF  and JCP are others. After all, it's other people's money he is playing with and he will make out fine regardless.


Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on November 07, 2015, 06:55:40 AM
Ackman seems like such a nice guy, but given enough money involved, he will roll over people, if it is to his advantage. That is why I take pleasure, when he gets screwed over by obviously smarter folks,  like with the HLF short investment. He makes bold bets and some of them work out spectacularly well and some of them go bust spectacularly. In some cases, it seems to me that his research is clearly lacking, given the size of his bets. VRX seems such a case, where he got in late, HLF  and JCP are others. After all, it's other people's money he is playing with and he will make out fine regardless.

I can imagine someone like Ackman may have more enemies than friends. But surely everyone on this board knows that having a few failed investments doesn't necessarily imply fatal flaws with character or investing skill. I presume even with so many things going against him at the moment, his track record in the past 10 years still looks decent, meaning better than all but a few.

I definitely think there will be a ton to learn from the VRX story for those involved or the onlookers. Ackman isn't the only "fool"; the list includes Lou Simpson, Sequoia, and others. It does make me think about the possibility and extent that those brilliant managers may decide to ride each other's coattail's without having done independent due diligence.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Mephistopheles on November 07, 2015, 07:55:46 AM
His track record is misleading because it doesn't include Gotham nor does it include the one stock Target fund that blew up. If you were to include these failures, I'm not sure how great his performance would look.

Nevertheless, I do like his style of concentration and investing in simple, predictable businesses. I also admire the gargantuan amounts of research he does; for MBIA he allegedly read/went through 100,000 pages of documents. Whether or not that much research is needed is debatable but it is admirable.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: plato1976 on November 07, 2015, 10:49:45 AM
In my opinion we should take Gotham into consideration, but not at the same degree for the target fund.
The target fund was a very aggressive move with options etc and I guess that's why they use a separate fund - ppl should have assumed high risk high return for that one.

His track record is misleading because it doesn't include Gotham nor does it include the one stock Target fund that blew up. If you were to include these failures, I'm not sure how great his performance would look.

Nevertheless, I do like his style of concentration and investing in simple, predictable businesses. I also admire the gargantuan amounts of research he does; for MBIA he allegedly read/went through 100,000 pages of documents. Whether or not that much research is needed is debatable but it is admirable.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Spekulatius on November 07, 2015, 11:00:01 AM
The issue with track records is survivorship bias, but  and related to that the asset size. Survivorship bias that when a fund does well, it will grow in size - if not, it will be closed down and the track record will be buried. Also this means that funds that do well, probably start small and tend to be big when the blow up, so even if the cumulated return from the start would have been good, this is irrelevant because in aggregate, the investors can well have low money.

I don't mind as much that Ackman makes mistakes, but trying o have other people pay for his mistakes (like with the Gotham Golf case) is a totally different issue and in my opinion indicated ethical flaws. I think this would be enough reason to never invest with someone like Ackman because I am no inclined to think that personal traits like they are likely to change.

Icahn is tough too and everybody knows it, but I think he has treated the investors of his fund in a straightforward manner. I could imagine to invest alongside someone like Icahn, but someone like Ackman would be a no no. I am surprised that he is held in that high regard in this board.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on November 07, 2015, 07:31:46 PM
Icahn is tough too and everybody knows it, but I think he has treated the investors of his fund in a straightforward manner. I could imagine to invest alongside someone like Icahn, but someone like Ackman would be a no no. I am surprised that he is held in that high regard in this board.

It's good that you mentioned Icahn. Any thoughts on IEP?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Liberty on December 15, 2015, 05:51:50 PM
Q3 letter: http://www.valuewalk.com/wp-content/uploads/2015/12/Pershing-Square-Holdings-Ltd.-Q3-Investor-Letter1.pdf
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Phaceliacapital on January 27, 2016, 12:17:25 AM
http://assets.pershingsquareholdings.com/2014/09/Pershing-Square-2015-Annual-Letter-PSH-January-26-2016.pdf

"Our biggest valuation error was assigning too much value to the so-called “platform value” in certain of our holdings."

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Patmo on January 27, 2016, 05:48:39 AM
simple, predictable businesses.

About that...
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on January 27, 2016, 06:42:49 AM
PSH's bonds trade 600 over, 7.4% YTM (compared to issue spread of 336, 5.5% YTM). Not an unreasonable blow-up risk to insure, in my opinion. You need almost every single stock to blow up spectacularly (not impossible) to lose money. Not super confident in Ackman's recent theses at all, but I'll take a little bet on him not having another 70% drawdown from here.

EDIT: min order size on IB is $250K, way too big for yours truly.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: cogitator99 on January 27, 2016, 09:12:05 PM
http://assets.pershingsquareholdings.com/2014/09/Pershing-Square-2015-Annual-Letter-PSH-January-26-2016.pdf

"Our biggest valuation error was assigning too much value to the so-called “platform value” in certain of our holdings."

Could've seen that coming. ;)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: cogitator99 on January 27, 2016, 09:18:16 PM
Bill Ackman: Stocks are pretty cheap; Disagree With Tepper

http://www.valuewalk.com/2015/09/bill-ackman-stocks-are-pretty-cheap-disagree-with-tepper/

Cheers,

Gio

In retrospect, master trader Tepper was right ;) He probably didn't lose 20% in 2015...
Title: Re: NL:PSH - Pershing Square Holdings
Post by: LongHaul on January 28, 2016, 09:23:37 AM
Gotham Golf was a huge holding of Gotham Partners, losing money and going bankrupt. Gotham partners than was gaining control of another real estate entity that was cash Rich and made an attempt to merge them against the will of the other owners. It indeed was a holder of preferred stock of CashRichCo that was suing and gaining enough support from the bankruptcy judge to block the merger. Gotham Golf failed and Gotham Partners reputation went with it no the fund went downhill.

The attempted merger was a clear attempt to disown minority and debt holders and I find that very ethically challenged. FWIW, I know this story from someone (message board acquaintance) who held the preferred stock at that time and was involved in the lawsuit - not that it matters.


I heard something similar about the Golf deal from someone who went to the meeting to sell it.  It smelled really bad to me. 


Ackman seems like such a nice guy, but given enough money involved, he will roll over people, if it is to his advantage. That is why I take pleasure, when he gets screwed over by obviously smarter folks,  like with the HLF short investment. He makes bold bets and some of them work out spectacularly well and some of them go bust spectacularly. In some cases, it seems to me that his research is clearly lacking, given the size of his bets. VRX seems such a case, where he got in late, HLF  and JCP are others. After all, it's other people's money he is playing with and he will make out fine regardless.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: obtuse_investor on March 15, 2016, 10:53:33 AM
As VRX free falls today, here is a letter from Pershing:
http://assets.pershingsquareholdings.com/2016/03/Pershing_Square_Sends_Communication_to_Investors_-_Final_en-1.pdf

Quote
Dear Pershing Square Investor,

Today, Valeant reported preliminary unaudited earnings for Q4, updated
guidance for Q1, full year 2016 and the next twelve months.

In particular, management shocked the market with revenue and earnings
guidance for the next twelve months (Q2 2016 to Q1 2017) which does
not appear to foot with continued favorable prescription trends and
management’s commentary on the call about the strength of the
underlying businesses.  Furthermore, the company’s 10-K has been
delayed requiring the company seek a waiver under its credit
agreement.

While we believe that it is highly likely that the banks will provide
a waiver, uncertainty about the potential for a default creates
enormous investor fear.  The above factors have caused investors to
lose total confidence in the company as reflected by the current 44%
decline in Valeant’s stock price.  Last week, Steve Fraidin, our Vice
Chairman, joined the board.  We are going to take a much more
proactive role at the company to protect and maximize the value of our
investment.

We continue to believe that the value of the underlying business
franchises that comprise Valeant are worth multiples of the current
market price.  Getting to those values, however, will require
restoration of shareholder confidence in the management and governance
of the company.  We will do our best to keep you promptly informed
subject to any limitations that we have now that we have recently
become insiders at the company.

Please feel free to contact the investor relations team or me if you
have further questions.

Sincerely,
Bill
Title: Re: NL:PSH - Pershing Square Holdings
Post by: doughishere on March 15, 2016, 09:37:44 PM
So the covenant wasn't even a capital or interest coverage covenant it was a 10k release covenant? ROFL. Am I right in reading that?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on March 15, 2016, 09:45:13 PM
It's both but not filing a 10K is a separate covenant issue.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: doughishere on March 15, 2016, 10:02:36 PM
It's both but not filing a 10K is a separate covenant issue.


As they say in Missouri....show me.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on March 15, 2016, 10:06:20 PM
Back in Dec 2015, to average down their cost on VRX, they sold 2 put options with a strike of 60, sold 2 calls with a 165 strike, and bought 1 call with a strike of 95 [based on news reports].  All these options reportedly expire in Jan 2017.

Given the sharp downward price movement in VRX, the short put options in VRX with a strike of 60 will hurt the mark to market valuation of the options, and NAV of PSH.   

There might be a cash margin call on the short put option position, or they might have offered other collateral already ..

Not sure how much of this is in the PSH portfolio compared with the other funds that Pershing Square manage ...

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on March 15, 2016, 10:27:15 PM
Ackman recently swapped APD stock for mostly APD options as a way to raise cash.  He'll probably do this with other positions.

Because the Target fund wasn't a good lesson on putting on massive option trades...

Quote
On March 8, 2016, certain of the Reporting Persons acquired on behalf of PS, PS II, Pershing Square International, and PSH American-style over-the-counter call options referencing 12,947,936 shares of the Issuer with Expiration Dates as set forth in Exhibit 99.4. Simultaneously with this acquisition, certain of the Reporting Persons sold on behalf of PS, PS II, Pershing Square International, and PSH 12,947,936 shares of the Issuer.

The counterparty to such over-the-counter options is Nomura Global Financial Products Inc.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on March 15, 2016, 11:38:16 PM

Picasso, thank you for that information. For those of you interested here are the links to disclosures

APD shares sold, and OTC options purchased on APD by various Pershing Square investment vehicles:
http://www.sec.gov/Archives/edgar/data/2969/000119312516498577/d144879dex994.htm

The strike price is 67.11, and options expire on various dates in March 2018.


Agreement - SHARE CALL OPTION MASTER CONFIRMATION
http://www.sec.gov/Archives/edgar/data/2969/000119312516498577/d144879dex995.htm


Sched 13D disclosure on APD position
http://www.sec.gov/Archives/edgar/data/2969/000119312516498577/d144879dsc13da.htm


Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on March 15, 2016, 11:54:38 PM
Ackman recently swapped APD stock for mostly APD options as a way to raise cash.  He'll probably do this with other positions.

Because the Target fund wasn't a good lesson on putting on massive option trades...

Quote
On March 8, 2016, certain of the Reporting Persons acquired on behalf of PS, PS II, Pershing Square International, and PSH American-style over-the-counter call options referencing 12,947,936 shares of the Issuer with Expiration Dates as set forth in Exhibit 99.4. Simultaneously with this acquisition, certain of the Reporting Persons sold on behalf of PS, PS II, Pershing Square International, and PSH 12,947,936 shares of the Issuer.

The counterparty to such over-the-counter options is Nomura Global Financial Products Inc.


If the fund manager is deploying the cash proceeds into other investments (either common stock or OTC options) then this fund has embedded leverage and increased the overall  leverage of the portfolio for PSH - readers of the PSH annual report may not realise the portfolio has increased its leverage via call options. So PSH has long term debt of US$996mn that they issued in June 2015, then there is the leverage via its positions in options.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on March 16, 2016, 12:56:07 AM

Looks like other Pershing Square investment vehicles closed out some of their VRX option positions in early February 2016.  No mention of PSH positions in this disclosure

http://www.sec.gov/Archives/edgar/data/885590/000119312516452440/d132982dex998.htm


http://www.sec.gov/Archives/edgar/data/885590/000119312516452440/d132982dsc13da.htm
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on March 16, 2016, 01:42:16 AM
PSH's bonds trade 600 over, 7.4% YTM (compared to issue spread of 336, 5.5% YTM). Not an unreasonable blow-up risk to insure, in my opinion. You need almost every single stock to blow up spectacularly (not impossible) to lose money. Not super confident in Ackman's recent theses at all, but I'll take a little bet on him not having another 70% drawdown from here.

EDIT: min order size on IB is $250K, way too big for yours truly.

The portfolio is selling common stocks and buying OTC options on the same underlying security - and this is the worrying point as a bondholder.

The issue is that the portfolio might end up being invested in a lot of OTC options, rather than common stocks.  Take an extreme position, where the whole portfolio is made up of OTC options as the investment manager swings for the fences in order to try and get NAV per share above their last high water mark so that they can earn their incentive management fee.  (NAV is below their high water mark of US$29.00 or thereabouts).

Options can obviously fall by 100% ... and if PSH defaults, then who knows what the value of that collateral is, for bond holders ...  If PSH were to default, the market prices of the underlying securities could fall (due to possible predatory selling by competitors of the underlying securities, and the unwinding of the delta hedge by the OTC option writer) and the value of the options falls are higher in percentage terms ...
Title: Re: NL:PSH - Pershing Square Holdings
Post by: handycap5 on March 16, 2016, 05:05:49 AM
Did we ever resolve whether PSH NA is subject to PFIC rules for US-taxable investors? I'm amazed it isn't more simple to figure this out on their website...
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Patmo on March 16, 2016, 06:07:02 AM
Ackman recently swapped APD stock for mostly APD options as a way to raise cash.  He'll probably do this with other positions.

Because the Target fund wasn't a good lesson on putting on massive option trades...

Quote
On March 8, 2016, certain of the Reporting Persons acquired on behalf of PS, PS II, Pershing Square International, and PSH American-style over-the-counter call options referencing 12,947,936 shares of the Issuer with Expiration Dates as set forth in Exhibit 99.4. Simultaneously with this acquisition, certain of the Reporting Persons sold on behalf of PS, PS II, Pershing Square International, and PSH 12,947,936 shares of the Issuer.

The counterparty to such over-the-counter options is Nomura Global Financial Products Inc.


If the fund manager is deploying the cash proceeds into other investments (either common stock or OTC options) then this fund has embedded leverage and increased the overall  leverage of the portfolio for PSH - readers of the PSH annual report may not realise the portfolio has increased its leverage via call options. So PSH has long term debt of US$996mn that they issued in June 2015, then there is the leverage via its positions in options.

Leverage on the leverage to bet the farm on a heavily leveraged play? What could possibly go wrong...........................................

This value investing thing is becoming too next level for me, I think I'll go back to videogames...
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on March 16, 2016, 07:13:34 PM
Ackman recently swapped APD stock for mostly APD options as a way to raise cash.  He'll probably do this with other positions.

Because the Target fund wasn't a good lesson on putting on massive option trades...

Quote
On March 8, 2016, certain of the Reporting Persons acquired on behalf of PS, PS II, Pershing Square International, and PSH American-style over-the-counter call options referencing 12,947,936 shares of the Issuer with Expiration Dates as set forth in Exhibit 99.4. Simultaneously with this acquisition, certain of the Reporting Persons sold on behalf of PS, PS II, Pershing Square International, and PSH 12,947,936 shares of the Issuer.

The counterparty to such over-the-counter options is Nomura Global Financial Products Inc.


If the fund manager is deploying the cash proceeds into other investments (either common stock or OTC options) then this fund has embedded leverage and increased the overall  leverage of the portfolio for PSH - readers of the PSH annual report may not realise the portfolio has increased its leverage via call options. So PSH has long term debt of US$996mn that they issued in June 2015, then there is the leverage via its positions in options.

Leverage on the leverage to bet the farm on a heavily leveraged play? What could possibly go wrong...........................................

This value investing thing is becoming too next level for me, I think I'll go back to videogames...

Value investing is buying securities for less than their intrinsic value with a margin of safety.

If you choose to finance your purchase using leverage (or use securities with embedded leverage such as options), then that is a different ball game...

There is a quote that summarises this difference succinctly - "to finish first, you must first finish".

Look at what happened to Martin Ebner ...
http://www.economist.com/node/1277304

Title: Re: NL:PSH - Pershing Square Holdings
Post by: muscleman on March 16, 2016, 08:13:18 PM
Did we ever resolve whether PSH NA is subject to PFIC rules for US-taxable investors? I'm amazed it isn't more simple to figure this out on their website...

It is. PSH last year went out as far as asking shareholders to submit their info so they can prepare the tax forms for each shareholder. That's why I sold back in 2014, only a month after I realized it is a PFIC.

I am really glad that I sold at that point. That's definitely luck instead of Alpha skill.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: dorsiacapital on March 16, 2016, 09:13:11 PM
Ackman recently swapped APD stock for mostly APD options as a way to raise cash.  He'll probably do this with other positions.

Because the Target fund wasn't a good lesson on putting on massive option trades...

Quote
On March 8, 2016, certain of the Reporting Persons acquired on behalf of PS, PS II, Pershing Square International, and PSH American-style over-the-counter call options referencing 12,947,936 shares of the Issuer with Expiration Dates as set forth in Exhibit 99.4. Simultaneously with this acquisition, certain of the Reporting Persons sold on behalf of PS, PS II, Pershing Square International, and PSH 12,947,936 shares of the Issuer.

The counterparty to such over-the-counter options is Nomura Global Financial Products Inc.


If the fund manager is deploying the cash proceeds into other investments (either common stock or OTC options) then this fund has embedded leverage and increased the overall  leverage of the portfolio for PSH - readers of the PSH annual report may not realise the portfolio has increased its leverage via call options. So PSH has long term debt of US$996mn that they issued in June 2015, then there is the leverage via its positions in options.

Leverage on the leverage to bet the farm on a heavily leveraged play? What could possibly go wrong...........................................

This value investing thing is becoming too next level for me, I think I'll go back to videogames...

Value investing is buying securities for less than their intrinsic value with a margin of safety.

If you choose to finance your purchase using leverage (or use securities with embedded leverage such as options), then that is a different ball game...

There is a quote that summarises this difference succinctly - "to finish first, you must first finish".

Look at what happened to Martin Ebner ...
http://www.economist.com/node/1277304

Leverage is incredibly dangerous, but I think wise use of leverage still counts as value investing depending on the terms.

For example, stealing from Greenblatt, the Black-Scholes model is standardized and not designed to anticipate upcoming special situations that may cause fluctuations in the stock price. So, for example, say there's a stock with a spinoff coming up that's been trading relatively flat. If you think the spinoff is a catalyst, then using LEAP call options could be particularly profitable because the volatility is misvalued.

A good example of this recently was Vodafone a few years ago where the market (arguably) wasn't even valuing its minority ownership in Verizon Wireless. The stock, like a good dividend paying telecom, had been trading very flat around 20-ish. Multi-year leaps were like $2.  People noticed the Verizon Wireless Asset, the stock went up to 35-40 (I think), and the calls went up a whole bunch.   Greenblatt in Genius talks about this with Wells Fargo in the early 1990s where Berkowitz made his career call. Kevin Byun at Denali has mentioned this in a letter or two as well.

Ackman's $VRX option play, however, was not a wise use of mispriced leverage (the volatility on Valeant since September has been incredibly high).  It was simply a way to short-term double up on the cheap.  (Total side note but it drove me irrationally crazy that financial media would say he increased his ownership stake from 5 to 9.9% without explaining mechanism of buying otm call options.) 

Ironic that potentially the reputational kiss of death for Ackman will be a positive carry trade (selling naked puts) on a stock whose entire business model was a positive carry trade (rising drug prices > cheap debt repayments).

 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: handycap5 on March 17, 2016, 07:19:13 AM
Did we ever resolve whether PSH NA is subject to PFIC rules for US-taxable investors? I'm amazed it isn't more simple to figure this out on their website...

It is. PSH last year went out as far as asking shareholders to submit their info so they can prepare the tax forms for each shareholder. That's why I sold back in 2014, only a month after I realized it is a PFIC.

I am really glad that I sold at that point. That's definitely luck instead of Alpha skill.

Muscles, thanks for answering this key question for me. Life is too short for PFIC. I found this comment online, which confirms your take (by the way, this world wide web thing is going to be huge!):

http://www.stockgumshoe.com/2015/05/microblog-buying-pershing-square-holdings-on-otc/
Title: Re: NL:PSH - Pershing Square Holdings
Post by: physdude on March 17, 2016, 11:29:07 AM
From my Reuters feed:

BRIEF-S&P says Pershing Square's 'BBB' ratings placed on creditwatch negative
    March 17 (Reuters) - S&P On Pershing Square 
    * Pershing square holdings ltd. 'BBB' ratings placed on creditwatch negative on higher leverage and weak performance
    * Creditwatch negative reflects the fund's weak investment performance,  which has resulted in higher leverage
    * Could lower Pershing's Rating If Valeant files for bankruptcy Or If PSH materially reduces free cash before Valeant's stock price has substantially recovered
    * Placed ratings on creditwatch negative to reflect substantial drop  in psh's nav over past 5 months as a result of very weak investment  performance

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Not too surprising given what is going on but a downgrade doesn't bode well for the fund.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: TwoCitiesCapital on March 17, 2016, 01:48:52 PM
If someone ::cough cough Icahn:: really, really wanted to squeeze Ackman at this point, all it would take is an announcement that he's increasing his long position in a certain supposed fraud that Ackman is massively short...
Title: Re: NL:PSH - Pershing Square Holdings
Post by: muscleman on March 17, 2016, 03:04:16 PM
If someone ::cough cough Icahn:: really, really wanted to squeeze Ackman at this point, all it would take is an announcement that he's increasing his long position in a certain supposed fraud that Ackman is massively short...

Or Icahn could simply buy VRX bonds and declare its technical default. Ackman has never been as vulnerable as this moment.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on March 17, 2016, 03:13:19 PM
If someone ::cough cough Icahn:: really, really wanted to squeeze Ackman at this point, all it would take is an announcement that he's increasing his long position in a certain supposed fraud that Ackman is massively short...

Or Icahn could simply buy VRX bonds and declare its technical default. Ackman has never been as vulnerable as this moment.

with almost half of capital being permanent, downside on the HLF position capped via derivatives, his VRX investment down 80% of max loss, and having just raised $800MM of cash via sale of MDLZ stock, I don't think he is incredibly vulnerable to external pressures. HE can still blow himself up, but this is a low gross exposure, long biased almost unlevered firm with a bunch of locked up an/or permanent capital.

If I had the money to size the PSH bonds appropriately (I don't), I'd be a nibbler here and a buyer on down moves (maybe forced selling when they get downgraded?). I think the chances of a 70%+ drawdown from here are low.

wouldn't buy the stock because I don't think the other holdings are compelling.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: TwoCitiesCapital on March 17, 2016, 04:18:19 PM
If someone ::cough cough Icahn:: really, really wanted to squeeze Ackman at this point, all it would take is an announcement that he's increasing his long position in a certain supposed fraud that Ackman is massively short...

Or Icahn could simply buy VRX bonds and declare its technical default. Ackman has never been as vulnerable as this moment.

with almost half of capital being permanent, downside on the HLF position capped via derivatives, his VRX investment down 80% of max loss, and having just raised $800MM of cash via sale of MDLZ stock, I don't think he is incredibly vulnerable to external pressures. HE can still blow himself up, but this is a low gross exposure, long biased almost unlevered firm with a bunch of locked up an/or permanent capital.

If I had the money to size the PSH bonds appropriately (I don't), I'd be a nibbler here and a buyer on down moves (maybe forced selling when they get downgraded?). I think the chances of a 70%+ drawdown from here are low.

wouldn't buy the stock because I don't think the other holdings are compelling.

Permanent capital will help, but it would hardly matter if he has to liquidate more holdings to cover the margin on a short position that went up by 10 -15% in a single day right after his largest holdings has tanked by 60% in the past week....
Title: Re: NL:PSH - Pershing Square Holdings
Post by: sampr01 on March 17, 2016, 05:07:41 PM
He specifically stated "he is NOT using any leverage".
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on March 17, 2016, 05:12:43 PM
Two cities, can you elaborate? he has very low gross exposure (in the context of hedge funds), 1 short position that is primarily long term OTC put options, he lost like 8% of NAV on the VRX move; it's not like he has a 100% position.

 I simply don't understand how this turns into a margin / leverage issue. He's pretty much unlevered.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on March 17, 2016, 05:13:52 PM
Two cities, can you elaborate? he has very low gross exposure (in the context of hedge funds), 1 short position that is primarily long term OTC put options, he lost like 8% of NAV on the VRX move; it's not like he has a 100% position.

 I simply don't understand how this turns into a margin / leverage issue. He's pretty much unlevered.

Agreed, the damage is already done.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: dorsiacapital on March 17, 2016, 06:30:45 PM
Two cities, can you elaborate? he has very low gross exposure (in the context of hedge funds), 1 short position that is primarily long term OTC put options, he lost like 8% of NAV on the VRX move; it's not like he has a 100% position.

 I simply don't understand how this turns into a margin / leverage issue. He's pretty much unlevered.

Agreed, the damage is already done.

Do think that Ackman isn't that over leveraged (really only the 800 million put on Valeant andthe 1 billion in bonds ), but I would love a hedge fund poet (dramatic irony capital?) who  bought HLF otm call options for just a little vig and let the  hedgers do the squeezing.

I know you shouldn't chase returns, process blah blah process, but if there aren't some redemptions this year, I think best way for Ackman to get above high water mark is find a way to commercialize with Franklin whatever he sells in these pitch meetings to institutions.

More generally, is anybody really fond of any of his long positions? I guess at this point Platform could spring upwards, but the hidden thesis of  many of his plays appears to be M&A (either being bought, Zoetis, Mondelez) or buying (CP), and I think that thesis is for now somewhat constrained by the HY debt market.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on March 17, 2016, 09:28:29 PM
Probably the only thing I like in his portfolio is ZTS.  That can turn into an animal version of Valeant with the right capital allocation.  Well, 2010-early 2015 Valeant.  Hopefully not late 2015-2016 Valeant....

While PAH is beaten down, I thought it was worth a look around $5 but at $9-ish it's close to fully priced imo.  There's no rush for 3G to acquire MDLZ either.  APD is too cyclical, same with CP.  It's hard to get excited about the rest of the portfolio.

Maybe FNMA/FMCC works out and he makes $5 billion on that trade.  It just seems like he's turned into Lampert or Berkowitz in terms of portfolio composition.  The portfolio is getting bogged down by value traps and instead of moving on, he's either trapped or doesn't want to admit defeat.  And it shows with some of the "asymmetric" bets in the portfolio such as currency puts or FNMA.

If Valeant goes to zero for some reason, I think redemptions will pick up in a big way.  Maybe it's not affecting him yet because he's playing full court defense claiming it's worth many multiples of the current share price, but hitting zero will leave a really sour taste in his investors mouths.  He literally top ticked it and rode his biggest investment ever down to zero.  How does he not face heavy redemptions at that point? 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: dorsiacapital on March 17, 2016, 09:54:04 PM
Probably the only thing I like in his portfolio is ZTS.  That can turn into an animal version of Valeant with the right capital allocation.  Well, 2010-early 2015 Valeant.  Hopefully not late 2015-2016 Valeant....

While PAH is beaten down, I thought it was worth a look around $5 but at $9-ish it's close to fully priced imo.  There's no rush for 3G to acquire MDLZ either.  APD is too cyclical, same with CP.  It's hard to get excited about the rest of the portfolio.

Maybe FNMA/FMCC works out and he makes $5 billion on that trade.  It just seems like he's turned into Lampert or Berkowitz in terms of portfolio composition.  The portfolio is getting bogged down by value traps and instead of moving on, he's either trapped or doesn't want to admit defeat.  And it shows with some of the "asymmetric" bets in the portfolio such as currency puts or FNMA.

If Valeant goes to zero for some reason, I think redemptions will pick up in a big way.  Maybe it's not affecting him yet because he's playing full court defense claiming it's worth many multiples of the current share price, but hitting zero will leave a really sour taste in his investors mouths.  He literally top ticked it and rode his biggest investment ever down to zero.  How does he not face heavy redemptions at that point?

Ixnay on the Valeant comparisons Pablo. I think we're now back to saying Transdigm ;-)

So much of his portfolio is: Chose the wrong day to become super leveraged near end of a commodity/debt cycle. Could be interesting in a few years, if the equities are playing like options on the capital structure.

Fannie Mae panel just got drawn; 2 conservatives, one liberal, not sure what political valence of issue is....
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on March 17, 2016, 10:07:38 PM
Probably the only thing I like in his portfolio is ZTS.  That can turn into an animal version of Valeant with the right capital allocation.  Well, 2010-early 2015 Valeant.  Hopefully not late 2015-2016 Valeant....

While PAH is beaten down, I thought it was worth a look around $5 but at $9-ish it's close to fully priced imo.  There's no rush for 3G to acquire MDLZ either.  APD is too cyclical, same with CP.  It's hard to get excited about the rest of the portfolio.

Maybe FNMA/FMCC works out and he makes $5 billion on that trade.  It just seems like he's turned into Lampert or Berkowitz in terms of portfolio composition.  The portfolio is getting bogged down by value traps and instead of moving on, he's either trapped or doesn't want to admit defeat.  And it shows with some of the "asymmetric" bets in the portfolio such as currency puts or FNMA.

If Valeant goes to zero for some reason, I think redemptions will pick up in a big way.  Maybe it's not affecting him yet because he's playing full court defense claiming it's worth many multiples of the current share price, but hitting zero will leave a really sour taste in his investors mouths.  He literally top ticked it and rode his biggest investment ever down to zero.  How does he not face heavy redemptions at that point? 

Just to point out - that PSH is a closed end fund and not subject to redemptions.  Pershing Capital Management's other assets under management may be in an open ended investment vehicle structure and may be subject to redemptions.

Even if Pershing Capital Management were to get massive redemptions in the other open ended funds, Pershing Capital Management will continue to manage PSH.
 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on March 17, 2016, 10:19:31 PM
He'll continue to manage PSH but it's hard to invest in any idea when you're busy liquidating what you can.  Trying to manage a fund when 30-50% of the assets are flowing out the door isn't a great situation.  You're forced to sell cheap and buy cheaper since you'll still find, say, MDLZ attractive but now you need even cheaper to catch up.  He has the permanent capital but he's already blown through half of it.  He keeps the same allocations across PSH as the funds, so redemptions in the fund will make him sell off positions in PSH.  Just a crappy position to be in for a PSH shareholder and I can see why it trades at a 20% discount to NAV, although that should narrow over time.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: roark33 on March 17, 2016, 10:27:16 PM
Picasso, from what I have read Ackman has a fairly tight lock-up, i.e. it takes you 8 quarters to redeem your entire position in the fund.  He only had 2% redemptions in Feb (post-Citron/VRX), so the max outflows he could have this year is around 40% and that's if everything redeems, starting in May.  I seriously doubt that will happen, but who knows...

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on March 17, 2016, 10:43:09 PM
Right, that's why I think the damage is already done.  But those 2% redemption figures were before the 50% VRX single day drop so we'll see how the May redemptions look like.  For some reason LP's in his funds have major stockholm syndrome.  He can blow up capital all the time and they say they're sticking with him, he's super bright, does a ton of work, has a great track record, etc.  But I think at this point if Valeant goes to $0 he probably loses half of his outside or non-permanent capital.  That might put him back at $8-9B of AUM.  Obviously not the end of the world....

It must be those cerulean blue eyes and silver hair. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on March 18, 2016, 12:03:55 AM
FYI, PSH's activity in MDLZ. 

It looks like PSH sold out of various common stock and OTC equity forward positions (equivalent to 12.29mn shares) to raise US$379.78mn in proceeds.

Then it used US$65.3mn of those proceeds to purchased 61,062 call options (representing 6,106,200 shares) on MDLZ with a strike price of US$30.00.  Expiry  is on various dates in September 2017.
For the US$65.3mn in option premium paid, PSH has notional exposure of US$249mn, so leverage of about 3.8x
The option premium of US$65.3mn represents about 1.3% of estimated gross assets of PSH.



Here is the link to the disclosure filing:
http://www.sec.gov/Archives/edgar/data/1103982/000119312516507074/d118679dex997.htm



Title: Re: NL:PSH - Pershing Square Holdings
Post by: dorsiacapital on March 18, 2016, 12:09:04 AM
Semi-contrarian take is that a significant drop in AUM would really help Ackman's ability to generate alpha by broadening potential universe of activist targets. In the last few years at least, it seems he's been working in a universe of 10 billion + with exception of the Franklin projects.

Also, totally underworked thesis, but right now only quite big companies will move the needle for Ackman, but a) quite big companies may tend to be somewhat better run; b) size of quite big companies means that textbook activist tricks don't move the needle as much as they could at medium companies.

Put another way, I wonder if Ackman would/could have invested in GGP when it was trading at 30 cents with his current AUM. Maybe he'd just have bought the whole thing but I wonder.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on March 18, 2016, 05:52:14 AM
What concerns me is the position conversions to options. IMHO, while the positions may or may not be attractive, with options he can continue to blow up just because of timing. In other words, I am not sure if he or much anyone else can show great results by doing options. (Sorry you option guys here ;) ).
Title: Re: NL:PSH - Pershing Square Holdings
Post by: benhacker on March 18, 2016, 07:44:04 AM
Quote
What concerns me is the position conversions to options. IMHO, while the positions may or may not be attractive, with options he can continue to blow up just because of timing. In other words, I am not sure if he or much anyone else can show great results by doing options. (Sorry you option guys here ;) ).

I think Picasso has coined a good and accurate term for this... "Deep YOLO".

I think it's accurate frankly.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: muscleman on March 18, 2016, 09:23:19 AM
Quote
What concerns me is the position conversions to options. IMHO, while the positions may or may not be attractive, with options he can continue to blow up just because of timing. In other words, I am not sure if he or much anyone else can show great results by doing options. (Sorry you option guys here ;) ).

I think Picasso has coined a good and accurate term for this... "Deep YOLO".

I think it's accurate frankly.

YOLO? What is that?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Picasso on March 18, 2016, 09:25:08 AM
That's where you dive off the deep end and ignore risk management.  How much can I make, who cares how much I can lose?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: adesigar on March 18, 2016, 09:47:53 AM
Quote
What concerns me is the position conversions to options. IMHO, while the positions may or may not be attractive, with options he can continue to blow up just because of timing. In other words, I am not sure if he or much anyone else can show great results by doing options. (Sorry you option guys here ;) ).

I think Picasso has coined a good and accurate term for this... "Deep YOLO".

I think it's accurate frankly.

YOLO? What is that?

You Only Live Once = Y O L O
Title: Re: NL:PSH - Pershing Square Holdings
Post by: randomep on March 18, 2016, 07:12:17 PM
hi all, I am totally new to Pershing Square, but I invest in Senvest, please tell me if my understanding is correct:

PSH/Senvent

- equity: $2.5B / $0.6B
- 2015 result: -20% / - 15%
- 2016 YTD; - 25% / - 10%
- stock price to NAV: 90% / 55%
- management fee: 1.5%/20%  vs. none
- both are close-ended funds
Title: Re: NL:PSH - Pershing Square Holdings
Post by: muscleman on March 18, 2016, 08:09:43 PM
hi all, I am totally new to Pershing Square, but I invest in Senvest, please tell me if my understanding is correct:

PSH/Senvent

- equity: $2.5B / $0.6B
- 2015 result: -20% / - 15%
- 2016 YTD; - 25% / - 10%
- stock price to NAV: 90% / 55%
- management fee: 1.5%/20%  vs. none
- both are close-ended funds

That's roughly correct. Except that when you buy Senvest, you are buying a slice of the GP as well. But when you buy PSH, you are buying only a slice of the LP.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: randomep on March 18, 2016, 08:47:51 PM
hi all, I am totally new to Pershing Square, but I invest in Senvest, please tell me if my understanding is correct:

PSH/Senvent

- equity: $2.5B / $0.6B
- 2015 result: -20% / - 15%
- 2016 YTD; - 25% / - 10%
- stock price to NAV: 90% / 55%
- management fee: 1.5%/20%  vs. none
- both are close-ended funds

That's roughly correct. Except that when you buy Senvest, you are buying a slice of the GP as well. But when you buy PSH, you are buying only a slice of the LP.

oh and I forgot the most important stat of all: NAV CAGR after fees

2004-today:    12% / 21%

just my very rough guesstimate

so why is there such a large difference in stock price vs NAV?????


(a rhetorical question)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on March 18, 2016, 08:56:21 PM
By now Ackman is the biggest laughingstock in the investment world. Much of what have been written here recently reflects that sentiment. Wrong thesis, horrible risk management, few of his picks are any good.

My question is, if we generously assume he has skill, when would be the best time to invest with him?

In hindsight, the beginning of last year was not a good time. He just posted one of the biggest returns in the world. He's on magazine covers. He floated PSH.

If now is not a good time either, when?

What uncertainties do we want to see removed before we can say it'd be time to invest?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on March 18, 2016, 08:59:23 PM
hi all, I am totally new to Pershing Square, but I invest in Senvest, please tell me if my understanding is correct:

PSH/Senvent

- equity: $2.5B / $0.6B
- 2015 result: -20% / - 15%
- 2016 YTD; - 25% / - 10%
- stock price to NAV: 90% / 55%
- management fee: 1.5%/20%  vs. none
- both are close-ended funds

That's roughly correct. Except that when you buy Senvest, you are buying a slice of the GP as well. But when you buy PSH, you are buying only a slice of the LP.

Some other differences worth noting are:
1. the amount of leverage that Senvest uses - from Sept 2015 report - total long listed equities position subject to mark to market valuations at C$2,000 mn vs shareholder equity (including minority interests) of C$820mn.  Also as outlined in note 4 of the September 2015 report that a theoretical 30% price change would result in a C$431mn impact or a 52% impact on shareholder equity (either up or down).
2. PSH reports weekly NAV of the portfolio, whilst Senvest discloses mark to market valuations of its portfolio on a quarterly basis
3. Senvest invests mainly in small and mid-caps, whilst PSH invests mainly in large caps.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on March 18, 2016, 10:31:23 PM
By now Ackman is the biggest laughingstock in the investment world. Much of what have been written here recently reflects that sentiment. Wrong thesis, horrible risk management, few of his picks are any good.

My question is, if we generously assume he has skill, when would be the best time to invest with him?

In hindsight, the beginning of last year was not a good time. He just posted one of the biggest returns in the world. He's on magazine covers. He floated PSH.

If now is not a good time either, when?

What uncertainties do we want to see removed before we can say it'd be time to invest?

If you believe he has skill to long-term outperform, then the answer to the "when" question is pretty much anytime.
Of course, it's kind of tautology, since by the very definition of long-term outperformance you'd outperform regardless of the time you started. You'd just outperform a bit more if you buy now after the huge underperformance.

If you don't believe he has skill to long-term outperform, it's not worth buying at all, since with 1.5%/20% headwind, you'd never win. Well, you might if he short-term outperforms, but that's likely just a gamble.

If you're not sure if he has skill to long-term outperform, well, that's a toughie. You could try to see how things work out for next X months or years. But how will you know if that's skill or luck? Overall, this is the tough decision for me regarding any investment manager. Most successful investment managers are great salesmen and they always have stories of why they will outperform. Looking at their track records is backward looking and does not guarantee future gains. Looking at their current positions means evaluating them based on your biases towards these positions. I still don't know if it's better when the investment manager holds positions I like (well if I like them, I could just buy them myself instead of paying the manager; also perhaps the manager has the same bad biases that I have) or when they hold positions I don't like (if I don't like them, why should I like the manager; otoh, if I don't like them, perhaps the manager has unique view that I don't)...

Going back to Ackman and PSH. Here are the things about Ackman & PSH:
1. Valeant position. I don't like it less at $30 compared to the higher prices though. So neutral perhaps.
2. Switching to options to increase VRX position, switching to options in Mondelez to preserve position and get cash. IMO people don't outperform long term with option bets except perhaps where long term options are Black-Scholes mispriced. So negative.
3. HLF short. This seems to have become ideological and personal. I'd rather this wasn't a public stand and Ackman could get out of it without "losing face". Right now it's a crappy position which he probably won't exit. So negative.
4. Other positions. I own none of them personally apart from small position in Fannie/Freddie prefs. I have looked at most of what he owns, since he runs concentrated portfolio. I don't think his positions are very cheap and attractive, but I also don't think they are bad. Some of them may do well long term. Some of them might be even cheap - I might just be undervaluing them. So slightly positive (could be a big positive if you believe Ackman's selection here).

So overall, I'd say I'm slightly to mid negative. I might dump my PSH position at a loss. I am still trying to decide if I like Ackman long term. I liked him and his positions more than Einhorn (GLRE) and Loeb (TPRE), which I dumped last year. It appears that my choice was wrong so far. Gotta think about it some more.

BTW, I wouldn't look it the way you do "What uncertainties do we want to see removed". If you won't trust Ackman to handle current situation, why would you trust him after it passes (e.g. VRX "uncertainty" resolves)? He could get into similar "uncertainty" in the future again, no?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kab60 on March 18, 2016, 11:30:12 PM
I really don't like his style. Didn't his old fund blow up? He seems so attached to his positions and wants to be proven right. I think his ego is too big to handle peoples money and with Berkshire recently at 1,25x BV I really don't get the attraction with the awful fees. Reading fooled by randomness I'm inclined to think he probably caught a lucky break until he didn't. But he does seem like a slick salesman.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on March 19, 2016, 12:44:44 AM
Ackman recently swapped APD stock for mostly APD options as a way to raise cash.  He'll probably do this with other positions.

Because the Target fund wasn't a good lesson on putting on massive option trades...

Quote
On March 8, 2016, certain of the Reporting Persons acquired on behalf of PS, PS II, Pershing Square International, and PSH American-style over-the-counter call options referencing 12,947,936 shares of the Issuer with Expiration Dates as set forth in Exhibit 99.4. Simultaneously with this acquisition, certain of the Reporting Persons sold on behalf of PS, PS II, Pershing Square International, and PSH 12,947,936 shares of the Issuer.

The counterparty to such over-the-counter options is Nomura Global Financial Products Inc.


I assume the dedicated fund which you're referring to where they invested in Target via options is the one they refer to here. 

http://www.forbes.com/2008/10/28/ackman-pershing-target-biz-wall-cz_dg_1028ackman.html

This story illustrates the risk of positions being converted from common stocks to options ...  If the fund had owned only the common stock, it most likely would have been profitable (TGT is now US$82.00), but with the option positions, they ran out of time and were forced to realise the loss and be at the mercy of Mr Market ...

Here is his subsequent letter to investors of that fund ..

http://www.marketfolly.com/2009/02/bill-ackmans-pershing-square-letter-to.html
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Hielko on March 19, 2016, 03:31:41 AM
hi all, I am totally new to Pershing Square, but I invest in Senvest, please tell me if my understanding is correct:

PSH/Senvent

- equity: $2.5B / $0.6B
- 2015 result: -20% / - 15%
- 2016 YTD; - 25% / - 10%
- stock price to NAV: 90% / 55%
- management fee: 1.5%/20%  vs. none
- both are close-ended funds
You know very well that describing the Senvest managment fee as zero is extremely misleading, as has been discussed in length in the Senvest thread... since operating expenses eat >5%+ of NAV/year @ Senvest...
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Haasje on March 19, 2016, 04:19:35 AM
I did not go over his track record to check this but I believe Ackman does great with the model:

margins are x% at company Y 

margins are x+z% at most comparables (i.e. much better) 

we buy big into company Y and start pressing to slash costs

----

Not sure, but it also seems like the dealmaking kind of positions (wasn't that Allergan) which remind me a bit of Icahn work well

----

When Pershing takes the jockey stock type positions they don't do as well (but with the number of positions Pershing takes (very few) all these observations are incredibly unreliable

----

Other observations:

On the short side the research is impressive for sure and when I tune into the "now often ridiculed" hour long presentations I always learn something  new about the longs. Granted, there is no overlap with my own positions. 

----

Its hard to argue Ackman doesn't enjoy attention, so I won't but the ego isn't all bad. Again, it is kind of speculation from the outside. I'm  not his shrink but I expect him to be quite driven.

----

The concentration gets ridiculed nowadays because it really sucks when you use it with jockey stock positions but it works fabulous if the source of your outperformance is activism/dealmaking.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kab60 on March 19, 2016, 04:43:04 AM
I think it's quiet dangerous how he commits so much capital and attention to highly leveraged companies where it's difficult for him to get out, if the thesis changes - not to say the risk of losing face when you've been telling the whole world why company x and y are under- and overvalued. While Bill's obviously smart, I think it also shows what a huge advantage smaller investors have.

I wanted Allan Mecham to take a stance on Outerwall and get them to smarten up and stop destroying value (taking advantage of his size), but taking a backseat has its advantages too since he can blow out of his position (well, he could - it's also getting harder for him with the big AUM) without anyone coming after him (since he already told everyone he was having doubts).

Obviously one needs to trust ones analysis when the markets tells you that you're wrong, but I don't think a big ego helps, since you might be missing when the market is right and the thesis changed - which is probably more often than we like to admit. Oh well. I might be too harsh on Bill Ackman, it's always easier looking in the rear window, but when you combine it all with high fees I really don't understand why retail investors would even consider it.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on March 19, 2016, 09:46:19 AM

If you're not sure if he has skill to long-term outperform, well, that's a toughie. You could try to see how things work out for next X months or years. But how will you know if that's skill or luck? Overall, this is the tough decision for me regarding any investment manager. Most successful investment managers are great salesmen and they always have stories of why they will outperform. Looking at their track records is backward looking and does not guarantee future gains. Looking at their current positions means evaluating them based on your biases towards these positions. I still don't know if it's better when the investment manager holds positions I like (well if I like them, I could just buy them myself instead of paying the manager; also perhaps the manager has the same bad biases that I have) or when they hold positions I don't like (if I don't like them, why should I like the manager; otoh, if I don't like them, perhaps the manager has unique view that I don't)...


How can we be sure of any manager, or ourselves, in this business?

To me it's always a judgment call, a step into the dark.

First you look at the track record; his record is seriously damaged, but still above average.

Second you look at the process. It's clear he made mistakes in handling VRX. And I agree with you on his use of the options.

But I don't have an issue with his broad stated approach - concentrate, focus on quality, focus on good managers (he thought so), focus on stable cash flow, avoid commodity and tech, avoid overly macro. It's likely true that he wasn't able to stick to these principles all the time.

One lesson for me was that I engaged in perhaps a bit too much hero worship and group thinking. I was never comfortable with VRX before, not because I had good judgment, but because I knew little about pharma and was generally cautious about roll-ups. But in this case, I looked at the list of major owners of VRX - Sequoia, ValueAct, Glenn Greenberg - thinking, how can they not know?

So while the collapse of VRX has indeed exposed other flaws in Ackman's portfolio, as we ask if Ackman is any good, the same question can be asked of other prominent VRX holders.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: randomep on March 19, 2016, 11:03:36 AM
hi all, I am totally new to Pershing Square, but I invest in Senvest, please tell me if my understanding is correct:

PSH/Senvent

- equity: $2.5B / $0.6B
- 2015 result: -20% / - 15%
- 2016 YTD; - 25% / - 10%
- stock price to NAV: 90% / 55%
- management fee: 1.5%/20%  vs. none
- both are close-ended funds

That's roughly correct. Except that when you buy Senvest, you are buying a slice of the GP as well. But when you buy PSH, you are buying only a slice of the LP.

Some other differences worth noting are:
1. the amount of leverage that Senvest uses - from Sept 2015 report - total long listed equities position subject to mark to market valuations at C$2,000 mn vs shareholder equity (including minority interests) of C$820mn.  Also as outlined in note 4 of the September 2015 report that a theoretical 30% price change would result in a C$431mn impact or a 52% impact on shareholder equity (either up or down).
2. PSH reports weekly NAV of the portfolio, whilst Senvest discloses mark to market valuations of its portfolio on a quarterly basis
3. Senvest invests mainly in small and mid-caps, whilst PSH invests mainly in large caps.

kiwing, you are wrong on leverage:

The company's short position as of sept 15 is only C$516 M. That is only 1/4 of total assets. You included the C$617M of outside hedge fund ownership as "leverage" which it is not. If you combine the two you will have about $1440M equity vs. $516 of leverage. True, it is indeed bigger than PSH.


Also Senvest posts results monthly on their website......

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on March 19, 2016, 12:10:34 PM
But I don't have an issue with his broad stated approach - concentrate, focus on quality, focus on good managers (he thought so), focus on stable cash flow, avoid commodity and tech, avoid overly macro. It's likely true that he wasn't able to stick to these principles all the time.

Yes, agreed, that's what I liked about Ackman's positions. I can call them a bit overpriced but mostly they are quality businesses. (In as sense it's like muscleman asking about Mecham - yeah, some of his buys are not cheap, but they look like growth/quality businesses).
 
Quote
So while the collapse of VRX has indeed exposed other flaws in Ackman's portfolio, as we ask if Ackman is any good, the same question can be asked of other prominent VRX holders.

Yes, agreed with that too. Although others perhaps did not react by moving to options - so in a way Ackman's reaction might be worse than others'. But if I invested money with others who bought VRX, I'd be questioning myself about them too.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: AzCactus on March 19, 2016, 12:48:12 PM
Not trying to derail the thread but I think a more relevant issue is conviction level and position sizing.  The managers mentioned above Sequoia, ValueAct, Glenn Greenberg obviously thought this was a great company and I believe that Valueact bought in most of their position a while ago and also reduced it near the top.  The point I'm making is that if these guys all made this a 3% position the thread would be a lot shorter.  The problem is that for most of these guys this is one of their top positions and they are all getting hammered right now. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on March 19, 2016, 01:17:53 PM
Not trying to derail the thread but I think a more relevant issue is conviction level and position sizing.  The managers mentioned above Sequoia, ValueAct, Glenn Greenberg obviously thought this was a great company and I believe that Valueact bought in most of their position a while ago and also reduced it near the top.  The point I'm making is that if these guys all made this a 3% position the thread would be a lot shorter.  The problem is that for most of these guys this is one of their top positions and they are all getting hammered right now.

That's a fair observation. However, it seems that if you want to outperform indexes, it's very hard to do so with diversified portfolios with 3% positions. There are other arguments for concentrated portfolios too including the famous "why would you buy your 25th best idea instead of the best idea". If I look to invest for outperformance, I'm mostly looking at managers who hold concentrated portfolios and not someone who's top positions are 2-4%.

But, yes, they probably should have rebalanced and sold some when VRX ran up. Sequoia especially should have lowered their VRX position perhaps to 10% or so and not >20% that it was at the top. OTOH, VRX was the one position giving them outperformance (and I was criticized when I pointed that out in the past), so that probably clouded their judgment with expectations of continued outperformance. ValueAct did the best by selling some last year.

Ackman might still be criticized most since he probably had highest cost of VRX among the bulls.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: AzCactus on March 19, 2016, 03:28:20 PM


That's a fair observation. However, it seems that if you want to outperform indexes, it's very hard to do so with diversified portfolios with 3% positions. There are other arguments for concentrated portfolios too including the famous "why would you buy your 25th best idea instead of the best idea". If I look to invest for outperformance, I'm mostly looking at managers who hold concentrated portfolios and not someone who's top positions are 2-4%.

But, yes, they probably should have rebalanced and sold some when VRX ran up. Sequoia especially should have lowered their VRX position perhaps to 10% or so and not >20% that it was at the top. OTOH, VRX was the one position giving them outperformance (and I was criticized when I pointed that out in the past), so that probably clouded their judgment with expectations of continued outperformance. ValueAct did the best by selling some last year.

Ackman might still be criticized most since he probably had highest cost of VRX among the bulls.
[/quote]

Having the highest cost is one thing.  Having the biggest mouth on the other hand is something different.  In my opinion that's largely the reason he takes more heat than some others.  Additionally, I don't think he's perceived as having nearly as much humility as he ought to. 

Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on March 21, 2016, 03:25:52 AM
Ackman recently swapped APD stock for mostly APD options as a way to raise cash.  He'll probably do this with other positions.

Because the Target fund wasn't a good lesson on putting on massive option trades...

Quote
On March 8, 2016, certain of the Reporting Persons acquired on behalf of PS, PS II, Pershing Square International, and PSH American-style over-the-counter call options referencing 12,947,936 shares of the Issuer with Expiration Dates as set forth in Exhibit 99.4. Simultaneously with this acquisition, certain of the Reporting Persons sold on behalf of PS, PS II, Pershing Square International, and PSH 12,947,936 shares of the Issuer.

The counterparty to such over-the-counter options is Nomura Global Financial Products Inc.


I assume the dedicated fund which you're referring to where they invested in Target via options is the one they refer to here. 

http://www.forbes.com/2008/10/28/ackman-pershing-target-biz-wall-cz_dg_1028ackman.html

This story illustrates the risk of positions being converted from common stocks to options ...  If the fund had owned only the common stock, it most likely would have been profitable (TGT is now US$82.00), but with the option positions, they ran out of time and were forced to realise the loss and be at the mercy of Mr Market ...

Here is his subsequent letter to investors of that fund ..

http://www.marketfolly.com/2009/02/bill-ackmans-pershing-square-letter-to.html

kiwing100,

You have tracked PSH more thoroughly than most. Do you happen to have an opinion on the investment merits/shortcomings of the PSH stock at the current level?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on March 21, 2016, 09:49:00 PM

Unable to get really comfortable with the fact that PSH converts from common stock holdings to option positions.  Haven't seen anywhere (perhaps overlooked) for risk management purposes if PSH limits their option positions as a percentage of their gross assets.   If PSH were to own 100% of their gross assets in option positions, that would be worrying as they would be at the mercy of Mr Market and might run out of time (due to option expiry) before the company situation gets fixed and Mr Market re-evaluates the stock price of the underlying investment (like the Target investment mentioned previously)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on March 21, 2016, 11:20:48 PM

If PSH were to own 100% of their gross assets in option positions, that would be worrying as they would be at the mercy of Mr Market and might run out of time (due to option expiry) before the company situation gets fixed and Mr Market re-evaluates the stock price of the underlying investment (like the Target investment mentioned previously)

The options are mostly part of its VRX and MDLZ positions, right?

I assumed they are far below 100% of the total assets, no?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on March 22, 2016, 06:11:32 AM

If PSH were to own 100% of their gross assets in option positions, that would be worrying as they would be at the mercy of Mr Market and might run out of time (due to option expiry) before the company situation gets fixed and Mr Market re-evaluates the stock price of the underlying investment (like the Target investment mentioned previously)

The options are mostly part of its VRX and MDLZ positions, right?

I assumed they are far below 100% of the total assets, no?


PSH has option positions on the following stocks:

VRX - mixture of options expiring in Jan 2017
long calls with 95 strike
short calls with 165 strike
short puts with 60 strike

http://www.sec.gov/Archives/edgar/data/885590/000119312515385412/d68063dex995.htm

the short put option has a strike of US$60.00, so to get the stock price above this level would reduce the losses on this option.
Ideally the stock price at US$165 will maximise the market value of PSH's option positions.

MDLZ - long calls with strike of US$30, expiring in Set 2017. approx 1.3% of gross assets http://www.sec.gov/Archives/edgar/data/1103982/000119312516507074/d118679dex997.htm

APD - long calls with strike of US$67.11 expiring in March 2018 - approx about 9.5% of gross assets http://www.sec.gov/Archives/edgar/data/2969/000119312516498577/d144879dex994.htm

PSH raised a net cash balance of approx US$670.4mn from the conversions from stock to options from APD and MDLZ.  the question is what will the asset manager choose to invest the cash in - stocks or more options?

From what I can tell, the other positions in the PSH portfolio are in the form of common stocks, however there isn't anything precluding them from selling the common stocks and replacing them with options.  I'm not sure that I would want to see subsequent disclosures that the PSH portfolio has converted its CP, QSR stock positions to options.  It would mean a lot of cash in the portfolio and one would wonder where it might get deployed and in what form (i.e stock or options). 


Title: Re: NL:PSH - Pershing Square Holdings
Post by: TwoCitiesCapital on March 22, 2016, 06:39:53 AM

If PSH were to own 100% of their gross assets in option positions, that would be worrying as they would be at the mercy of Mr Market and might run out of time (due to option expiry) before the company situation gets fixed and Mr Market re-evaluates the stock price of the underlying investment (like the Target investment mentioned previously)

The options are mostly part of its VRX and MDLZ positions, right?

I assumed they are far below 100% of the total assets, no?


PSH has option positions on the following stocks:

VRX - mixture of options expiring in Jan 2017
long calls with 95 strike
short calls with 165 strike
short puts with 60 strike

http://www.sec.gov/Archives/edgar/data/885590/000119312515385412/d68063dex995.htm

the short put option has a strike of US$60.00, so to get the stock price above this level would reduce the losses on this option.
Ideally the stock price at US$165 will maximise the market value of PSH's option positions.

MDLZ - long calls with strike of US$30, expiring in Set 2017. approx 1.3% of gross assets http://www.sec.gov/Archives/edgar/data/1103982/000119312516507074/d118679dex997.htm

APD - long calls with strike of US$67.11 expiring in March 2018 - approx about 9.5% of gross assets http://www.sec.gov/Archives/edgar/data/2969/000119312516498577/d144879dex994.htm

PSH raised a net cash balance of approx US$670.4mn from the conversions from stock to options from APD and MDLZ.  the question is what will the asset manager choose to invest the cash in - stocks or more options?

From what I can tell, the other positions in the PSH portfolio are in the form of common stocks, however there isn't anything precluding them from selling the common stocks and replacing them with options.  I'm not sure that I would want to see subsequent disclosures that the PSH portfolio has converted its CP, QSR stock positions to options.  It would mean a lot of cash in the portfolio and one would wonder where it might get deployed and in what form (i.e stock or options).

A large portion of it is likely going to their banks who provided them the OTC options as variation margin for the puts that are deeply, deeply in the money. Ackman's strike price for those 12.5M shares/puts is slightly above $60 per share. He's currently $400+ million in the whole for those options and the broker isn't going to accept that kind of counterparty risk.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on March 22, 2016, 06:56:37 AM
TwoCities, as of 2/29 Pershing Square had $12.2B of AUM. They've since lost 8-10% or whatever so let's call it $11B. A $400MM liability related to the put has very little counterparty risk.

I repeat, Pershing square has relatively low gross, abundant liquidity, and is using next to no "margin". I doubt the counterparty is at all worried.

The PSHNA bonds have rallied to $91 / $92  (from $85 / $86 on the day of VRX -50%) as I think the market is starting to digest that the blow up risk is quite minimal here.

Two cities, can you elaborate? he has very low gross exposure (in the context of hedge funds), 1 short position that is primarily long term OTC put options, he lost like 8% of NAV on the VRX move; it's not like he has a 100% position.

 I simply don't understand how this turns into a margin / leverage issue. He's pretty much unlevered.

bump

Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on March 22, 2016, 07:32:51 AM
TwoCities, as of 2/29 Pershing Square had $12.2B of AUM. They've since lost 8-10% or whatever so let's call it $11B. A $400MM liability related to the put has very little counterparty risk.

I repeat, Pershing square has relatively low gross, abundant liquidity, and is using next to no "margin". I doubt the counterparty is at all worried.

The PSHNA bonds have rallied to $91 / $92  (from $85 / $86 on the day of VRX -50%) as I think the market is starting to digest that the blow up risk is quite minimal here.

Two cities, can you elaborate? he has very low gross exposure (in the context of hedge funds), 1 short position that is primarily long term OTC put options, he lost like 8% of NAV on the VRX move; it's not like he has a 100% position.

 I simply don't understand how this turns into a margin / leverage issue. He's pretty much unlevered.

bump

Thank you Pupil.

Apparently people are not too comfortable with the conversion from common to options.

What do you make of that? Do you think the cash raising is done or might Ackman have other plans?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: TwoCitiesCapital on March 22, 2016, 07:41:23 AM
TwoCities, as of 2/29 Pershing Square had $12.2B of AUM. They've since lost 8-10% or whatever so let's call it $11B. A $400MM liability related to the put has very little counterparty risk.

I repeat, Pershing square has relatively low gross, abundant liquidity, and is using next to no "margin". I doubt the counterparty is at all worried.

The PSHNA bonds have rallied to $91 / $92  (from $85 / $86 on the day of VRX -50%) as I think the market is starting to digest that the blow up risk is quite minimal here.

Two cities, can you elaborate? he has very low gross exposure (in the context of hedge funds), 1 short position that is primarily long term OTC put options, he lost like 8% of NAV on the VRX move; it's not like he has a 100% position.

 I simply don't understand how this turns into a margin / leverage issue. He's pretty much unlevered.

bump

It doesn't matter the assets under management relative to the liability - everyone posts variation margin for derivative positions (OTC and cleared) because the banks will not accept that risk. Bridgewater with $135B in assets under management posts margin. PIMCO with a trillion in AUM posts margin. Pershing Square will also post margin. It's just as simple as that. That variation margin just from the puts is going to be close to $400M at this point which is a good chunk of the cash he just raised.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on March 22, 2016, 08:09:33 AM
TwoCities, as of 2/29 Pershing Square had $12.2B of AUM. They've since lost 8-10% or whatever so let's call it $11B. A $400MM liability related to the put has very little counterparty risk.

I repeat, Pershing square has relatively low gross, abundant liquidity, and is using next to no "margin". I doubt the counterparty is at all worried.

The PSHNA bonds have rallied to $91 / $92  (from $85 / $86 on the day of VRX -50%) as I think the market is starting to digest that the blow up risk is quite minimal here.

Two cities, can you elaborate? he has very low gross exposure (in the context of hedge funds), 1 short position that is primarily long term OTC put options, he lost like 8% of NAV on the VRX move; it's not like he has a 100% position.

 I simply don't understand how this turns into a margin / leverage issue. He's pretty much unlevered.

bump

It doesn't matter the assets under management relative to the liability - everyone posts variation margin for derivative positions (OTC and cleared) because the banks will not accept that risk. Bridgewater with $135B in assets under management posts margin. PIMCO with a trillion in AUM posts margin. Pershing Square will also post margin. It's just as simple as that. That variation margin just from the puts is going to be close to $400M at this point which is a good chunk of the cash he just raised.

Thanks for that.

If posting margin is the sole purpose of the raising, it seems he's done until VRX hits $10.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on March 22, 2016, 08:27:02 AM
TwoCities, as of 2/29 Pershing Square had $12.2B of AUM. They've since lost 8-10% or whatever so let's call it $11B. A $400MM liability related to the put has very little counterparty risk.

I repeat, Pershing square has relatively low gross, abundant liquidity, and is using next to no "margin". I doubt the counterparty is at all worried.

The PSHNA bonds have rallied to $91 / $92  (from $85 / $86 on the day of VRX -50%) as I think the market is starting to digest that the blow up risk is quite minimal here.

Two cities, can you elaborate? he has very low gross exposure (in the context of hedge funds), 1 short position that is primarily long term OTC put options, he lost like 8% of NAV on the VRX move; it's not like he has a 100% position.

 I simply don't understand how this turns into a margin / leverage issue. He's pretty much unlevered.

bump

It doesn't matter the assets under management relative to the liability - everyone posts variation margin for derivative positions (OTC and cleared) because the banks will not accept that risk. Bridgewater with $135B in assets under management posts margin. PIMCO with a trillion in AUM posts margin. Pershing Square will also post margin. It's just as simple as that. That variation margin just from the puts is going to be close to $400M at this point which is a good chunk of the cash he just raised.
TwoCities, as of 2/29 Pershing Square had $12.2B of AUM. They've since lost 8-10% or whatever so let's call it $11B. A $400MM liability related to the put has very little counterparty risk.

I repeat, Pershing square has relatively low gross, abundant liquidity, and is using next to no "margin". I doubt the counterparty is at all worried.

The PSHNA bonds have rallied to $91 / $92  (from $85 / $86 on the day of VRX -50%) as I think the market is starting to digest that the blow up risk is quite minimal here.

Two cities, can you elaborate? he has very low gross exposure (in the context of hedge funds), 1 short position that is primarily long term OTC put options, he lost like 8% of NAV on the VRX move; it's not like he has a 100% position.

 I simply don't understand how this turns into a margin / leverage issue. He's pretty much unlevered.

bump

It doesn't matter the assets under management relative to the liability - everyone posts variation margin for derivative positions (OTC and cleared) because the banks will not accept that risk. Bridgewater with $135B in assets under management posts margin. PIMCO with a trillion in AUM posts margin. Pershing Square will also post margin. It's just as simple as that. That variation margin just from the puts is going to be close to $400M at this point which is a good chunk of the cash he just raised.

FYI, PSH raised net proceeds of about US$670mn (note this does not include other Pershing Square investment vehicles) from the conversion from common stock to options. 

Given PSH's short put position on 3.687mn VRX shares at a strike of US$60.00 this would be more than sufficient to finance a margin call even if VRX went to zero.  (it would require US$221mn [3.687 x 60 strike price on the put]).  This leaves a remaining cash balance of US$448mn at PSH.

This link shows the PSH short option position on VRX of 3.687mn shares at a strike of US$60.00
http://www.sec.gov/Archives/edgar/data/885590/000119312515385412/d68063dex995.htm
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on March 22, 2016, 08:30:21 AM
TwoCities, as of 2/29 Pershing Square had $12.2B of AUM. They've since lost 8-10% or whatever so let's call it $11B. A $400MM liability related to the put has very little counterparty risk.

I repeat, Pershing square has relatively low gross, abundant liquidity, and is using next to no "margin". I doubt the counterparty is at all worried.

The PSHNA bonds have rallied to $91 / $92  (from $85 / $86 on the day of VRX -50%) as I think the market is starting to digest that the blow up risk is quite minimal here.

Two cities, can you elaborate? he has very low gross exposure (in the context of hedge funds), 1 short position that is primarily long term OTC put options, he lost like 8% of NAV on the VRX move; it's not like he has a 100% position.

 I simply don't understand how this turns into a margin / leverage issue. He's pretty much unlevered.

bump

It doesn't matter the assets under management relative to the liability - everyone posts variation margin for derivative positions (OTC and cleared) because the banks will not accept that risk. Bridgewater with $135B in assets under management posts margin. PIMCO with a trillion in AUM posts margin. Pershing Square will also post margin. It's just as simple as that. That variation margin just from the puts is going to be close to $400M at this point which is a good chunk of the cash he just raised.

Sorry if I wasn't clear. I don't disagree with you that they may have to post margin on derivative positions.

I may have misread your tone, but it seems like you are saying there is substantial blow-up risk here and that's where I don't agree because of the small size of liabilities related to AUM and the nature of the liabilities (in PSH's case, bonds with no NAV covenants, so no "margin call scenario" and wrt the options they are primarily fixed downside type of stuff, ie we know what Pershing will lose if/when VRX goes to zero).

On the options, I think it increases the risk of leverage increasing, but so far they are of small size and we don't know what he's doing with the proceeds. So far he's been converting into ITM calls and cash, that to me looks like buying puts and limiting risk. Now if he takes that cash and puts in another giant binary bet, then the risk reduction won't matter.

I'm not an ackman fan at all...I just think news of his imminent demise / blow up is greatly exaggerated, but it doesn't matter because I am too small a fish to buy the bonds to take that position. I'm just trying to put the losses / leverage / risk in context here. A virtually unlevered (so far) low gross fund with some very liquid holdings and no real short book just shouldn't be top of mind in terms of blow-up risk.

Below is the main thing I took issue with. If HLF went up 10-15% in day, PSH would lose 1-2%. Hardly consequential. To me the below quote seems alarmist. If you were saying if HLF went up 100% and he lost another 10% of NAV that it would be bad, I agree. But it still probably wouldn't cripple him to the point of some kind of massive forced selling.

Permanent capital will help, but it would hardly matter if he has to liquidate more holdings to cover the margin on a short position that went up by 10 -15% in a single day right after his largest holdings has tanked by 60% in the past week....

Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on March 22, 2016, 08:58:12 AM

FYI, PSH raised net proceeds of about US$670mn (note this does not include other Pershing Square investment vehicles) from the conversion from common stock to options. 

Given PSH's short put position on 3.687mn VRX shares at a strike of US$60.00 this would be more than sufficient to finance a margin call even if VRX went to zero.  (it would require US$221mn [3.687 x 60 strike price on the put]).  This leaves a remaining cash balance of US$448mn at PSH.

This link shows the PSH short option position on VRX of 3.687mn shares at a strike of US$60.00
http://www.sec.gov/Archives/edgar/data/885590/000119312515385412/d68063dex995.htm

Thank you kiwing100. Very clear. I would be quite shocked if he does anything strange with the cash after what he has gone through.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: TwoCitiesCapital on March 22, 2016, 09:07:37 AM
TwoCities, as of 2/29 Pershing Square had $12.2B of AUM. They've since lost 8-10% or whatever so let's call it $11B. A $400MM liability related to the put has very little counterparty risk.

I repeat, Pershing square has relatively low gross, abundant liquidity, and is using next to no "margin". I doubt the counterparty is at all worried.

The PSHNA bonds have rallied to $91 / $92  (from $85 / $86 on the day of VRX -50%) as I think the market is starting to digest that the blow up risk is quite minimal here.

Two cities, can you elaborate? he has very low gross exposure (in the context of hedge funds), 1 short position that is primarily long term OTC put options, he lost like 8% of NAV on the VRX move; it's not like he has a 100% position.

 I simply don't understand how this turns into a margin / leverage issue. He's pretty much unlevered.

bump

It doesn't matter the assets under management relative to the liability - everyone posts variation margin for derivative positions (OTC and cleared) because the banks will not accept that risk. Bridgewater with $135B in assets under management posts margin. PIMCO with a trillion in AUM posts margin. Pershing Square will also post margin. It's just as simple as that. That variation margin just from the puts is going to be close to $400M at this point which is a good chunk of the cash he just raised.

Sorry if I wasn't clear. I don't disagree with you that they may have to post margin on derivative positions.

I may have misread your tone, but it seems like you are saying there is substantial blow-up risk here and that's where I don't agree because of the small size of liabilities related to AUM and the nature of the liabilities (in PSH's case, bonds with no NAV covenants, so no "margin call scenario" and wrt the options they are primarily fixed downside type of stuff, ie we know what Pershing will lose if/when VRX goes to zero).

On the options, I think it increases the risk of leverage increasing, but so far they are of small size and we don't know what he's doing with the proceeds. So far he's been converting into ITM calls and cash, that to me looks like buying puts and limiting risk. Now if he takes that cash and puts in another giant binary bet, then the risk reduction won't matter.

I'm not an ackman fan at all...I just think news of his imminent demise / blow up is greatly exaggerated, but it doesn't matter because I am too small a fish to buy the bonds to take that position. I'm just trying to put the losses / leverage / risk in context here. A virtually unlevered (so far) low gross fund with some very liquid holdings and no real short book just shouldn't be top of mind in terms of blow-up risk.

Below is the main thing I took issue with. If HLF went up 10-15% in day, PSH would lose 1-2%. Hardly consequential. To me the below quote seems alarmist. If you were saying if HLF went up 100% and he lost another 10% of NAV that it would be bad, I agree. But it still probably wouldn't cripple him to the point of some kind of massive forced selling.

Permanent capital will help, but it would hardly matter if he has to liquidate more holdings to cover the margin on a short position that went up by 10 -15% in a single day right after his largest holdings has tanked by 60% in the past week....

Maybe we just misread each other. My only point was that the low client flows don't really matter if he's still having to liquidate and leverage to cover margin calls which is likely a similar response he'd have to redemptions. Given the pettiness of the disagreement with him and Icahn awhile back, I wouldn't have been surprised if Icahn (or Loeb, or any of the HF dudes who hate him) announced new/increased positions in HLF to drive it up while other people were front-running Ackman to drive down his longs further exacerbating his selling/re-leveraging.

It's not a "virtuous cycle" in that it couldn't be repeated, so it probably wouldn't lead to his blow up, but it would have certainly made his week alot worse if he had to come up with another $200M in cash to cover margin for the short position.

I don't think PSH is going to "blow up", but I do think it's going to take a long time for him to recover from the VRX and if I owned the stock I would be slightly concerned about his replacing equity exposure with options to fund the margin as it does increase the risk to those positions by a fair bit.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on March 23, 2016, 01:32:20 AM

FYI, PSH raised net proceeds of about US$670mn (note this does not include other Pershing Square investment vehicles) from the conversion from common stock to options. 

Given PSH's short put position on 3.687mn VRX shares at a strike of US$60.00 this would be more than sufficient to finance a margin call even if VRX went to zero.  (it would require US$221mn [3.687 x 60 strike price on the put]).  This leaves a remaining cash balance of US$448mn at PSH.

This link shows the PSH short option position on VRX of 3.687mn shares at a strike of US$60.00
http://www.sec.gov/Archives/edgar/data/885590/000119312515385412/d68063dex995.htm

Thank you kiwing100. Very clear. I would be quite shocked if he does anything strange with the cash after what he has gone through.


Aside from using the cash for future potential adverse mark to market valuations and margin calls on:
1. Short sale position of HLF
2. short put position on VRX with strike of US$60

Given the price drops over the last year, PSH might use the excess cash to buy more common stock or call options on VRX or PAH, or a new investment holding ...

The other Pershing Square Capital open ended investment vehicles however might also need to fund investor redemptions, something that PSH as a closed end fund will not have to face.


If you look at the PSH holding in VRX historically, they have basically tried to average down when the price fell a lot below their cost. 

Initially PSH bought common stock at 178.38, then when the VRX price fell to 108 (a fall of 39%), PSH averaged down and managed to get the average cost per share for the common stock position to US$119.76.

In October 2015, PSH bought some listed LEAPS with a strike of 120.00 when the stock price closed at US$118.61 

Then in Nov 20, 2015 when the stock price closed at US$91.00 (about 24% lower than the average cost per share on the common stock they owned, and 49% from their initial entry price into the common stock), PSH averaged down aggressively with options.  These options expire on 20 Jan 2017
1) PSH bought calls with a strike of US$95.00, however given the volatility the OTC options were expensive,
2) so PSH tried to get them cheaper by selling calls with a strike of US$165 which help to offset the cost of the 95 strike call options. 
3) to get the cost of the 95 strike call options even cheaper, PSH also sold put options on VRX with a strike at US$60. It might have seemed unlikely at the time that the VRX share price would fall a further 34% from the current price of US$91.00 (after all, it had already fall 49% from their initial entry price when PSH already believed it was cheap). The 60 strike on the put would have been a 66% fall from PSH's initial common stock purchase price.

As the market price of VRX fell to US$28.00, PSH faced margin calls on the VRX short put with strike of 60.  Given that there was most likely little excess cash in the PSH portfolio (as it was mostly invested) to meet the margin call, PSH sold its common stock positions of MDLZ and APD to raise cash. 

PSH still wanted economic exposure to the stocks it had just sold, so it took option positions in those stocks.  PSH bought call options in
1) MDLZ with a strike of 30 (vs the stock price of 36.34 on the day it bought the call options).  The options expire in September 2017.
2) APD with a strike of 67.11 (vs the stock price of 134.22 on the day it bought the call options).  The option expiry is March 2018.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on March 23, 2016, 08:07:12 AM

Aside from using the cash for future potential adverse mark to market valuations and margin calls on:
1. Short sale position of HLF
2. short put position on VRX with strike of US$60

Given the price drops over the last year, PSH might use the excess cash to buy more common stock or call options on VRX or PAH, or a new investment holding ...

The other Pershing Square Capital open ended investment vehicles however might also need to fund investor redemptions, something that PSH as a closed end fund will not have to face.


If you look at the PSH holding in VRX historically, they have basically tried to average down when the price fell a lot below their cost. 

Initially PSH bought common stock at 178.38, then when the VRX price fell to 108 (a fall of 39%), PSH averaged down and managed to get the average cost per share for the common stock position to US$119.76.

In October 2015, PSH bought some listed LEAPS with a strike of 120.00 when the stock price closed at US$118.61 

Then in Nov 20, 2015 when the stock price closed at US$91.00 (about 24% lower than the average cost per share on the common stock they owned, and 49% from their initial entry price into the common stock), PSH averaged down aggressively with options. 
1) PSH bought calls with a strike of US$95.00, however given the volatility the OTC options were expensive,
2) so PSH tried to get them cheaper by selling calls with a strike of US$165 which help to offset the cost of the 95 strike call options. 
3) to get the cost of the 95 strike call options even cheaper, PSH also sold put options on VRX with a strike at US$60. It might have seemed unlikely at the time that the VRX share price would fall a further 34% from the current price of US$91.00 (after all, it had already fall 49% from their initial entry price when PSH already believed it was cheap). The 60 strike on the put would have been a 66% fall from PSH's initial common stock purchase price.

As the market price of VRX fell to US$28.00, PSH faced margin calls on the VRX short put with strike of 60.  Given that there was most likely little excess cash in the PSH portfolio (as it was mostly invested) to meet the margin call, PSH sold its common stock positions of MDLZ and APD to raise cash. 

PSH still wanted economic exposure to the stocks it had just sold, so it took option positions in those stocks.  PSH bought call options in
1) MDLZ with a strike of 30 (vs the stock price of 36.34 on the day it bought the call options).  The options expire in September 2017.
2) APD with a strike of 67.11 (vs the stock price of 134.22 on the day it bought the call options).  The option expiry is March 2018.

Thanks. Nice review of events.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: doughishere on March 24, 2016, 07:16:14 PM
Fresh off the press. 2015 Annual Report.

http://assets.pershingsquareholdings.com/2016/03/PSH-Annual-Report-12.31.151.pdf
Title: Re: NL:PSH - Pershing Square Holdings
Post by: dorsiacapital on March 24, 2016, 07:52:41 PM

FYI, PSH raised net proceeds of about US$670mn (note this does not include other Pershing Square investment vehicles) from the conversion from common stock to options. 

Given PSH's short put position on 3.687mn VRX shares at a strike of US$60.00 this would be more than sufficient to finance a margin call even if VRX went to zero.  (it would require US$221mn [3.687 x 60 strike price on the put]).  This leaves a remaining cash balance of US$448mn at PSH.

This link shows the PSH short option position on VRX of 3.687mn shares at a strike of US$60.00
http://www.sec.gov/Archives/edgar/data/885590/000119312515385412/d68063dex995.htm

Thank you kiwing100. Very clear. I would be quite shocked if he does anything strange with the cash after what he has gone through.


Aside from using the cash for future potential adverse mark to market valuations and margin calls on:
1. Short sale position of HLF
2. short put position on VRX with strike of US$60

Given the price drops over the last year, PSH might use the excess cash to buy more common stock or call options on VRX or PAH, or a new investment holding ...

The other Pershing Square Capital open ended investment vehicles however might also need to fund investor redemptions, something that PSH as a closed end fund will not have to face.


If you look at the PSH holding in VRX historically, they have basically tried to average down when the price fell a lot below their cost. 

Initially PSH bought common stock at 178.38, then when the VRX price fell to 108 (a fall of 39%), PSH averaged down and managed to get the average cost per share for the common stock position to US$119.76.

In October 2015, PSH bought some listed LEAPS with a strike of 120.00 when the stock price closed at US$118.61 

Then in Nov 20, 2015 when the stock price closed at US$91.00 (about 24% lower than the average cost per share on the common stock they owned, and 49% from their initial entry price into the common stock), PSH averaged down aggressively with options.  These options expire on 20 Jan 2017
1) PSH bought calls with a strike of US$95.00, however given the volatility the OTC options were expensive,
2) so PSH tried to get them cheaper by selling calls with a strike of US$165 which help to offset the cost of the 95 strike call options. 
3) to get the cost of the 95 strike call options even cheaper, PSH also sold put options on VRX with a strike at US$60. It might have seemed unlikely at the time that the VRX share price would fall a further 34% from the current price of US$91.00 (after all, it had already fall 49% from their initial entry price when PSH already believed it was cheap). The 60 strike on the put would have been a 66% fall from PSH's initial common stock purchase price.

As the market price of VRX fell to US$28.00, PSH faced margin calls on the VRX short put with strike of 60.  Given that there was most likely little excess cash in the PSH portfolio (as it was mostly invested) to meet the margin call, PSH sold its common stock positions of MDLZ and APD to raise cash. 

PSH still wanted economic exposure to the stocks it had just sold, so it took option positions in those stocks.  PSH bought call options in
1) MDLZ with a strike of 30 (vs the stock price of 36.34 on the day it bought the call options).  The options expire in September 2017.
2) APD with a strike of 67.11 (vs the stock price of 134.22 on the day it bought the call options).  The option expiry is March 2018.

This is largely correct, but a bit wrong on several points.

Just to clarify, Ackman initially bought around 20 millions shares in Spring 2015. I think his average purchase price was in the high 100s - 180/190.

In October, post Left, Ackman then bought 2 million shares. This slightly reduced his purchase price, although certainly not to an average cost of 118.

I haven't seen anything about these October leaps, but perhaps you have.

In November, Ackman did the options trade basically as you described. There were actually two collars, one for Feb 2016 options and one for January 2017 options.  The entry price appears to have been in the 70s.  The Feb 2016 options expired below Ackman's break even on that segment.  Matt Levine has an excellent graph of the profit/loss on the trade http://www.bloombergview.com/articles/2015-11-24/bill-ackman-found-a-cheap-way-to-buy-more-valeant-stock#footnote-1448386568376).  The trade, obviously sensitive to time expiry, meant that he would break even in the low 160s.

At this point in time, per Matt Levine, (http://www.bloombergview.com/articles/2016-03-15/ackman-s-valeant-investment-keeps-getting-worse) Ackman will have on paper lost his entire investment of 4.1 billion if Valeant goes to 17 (because of having to pay out the puts).  If it goes to 0, Ackman will lose 5 billion.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Ballinvarosig Investors on March 25, 2016, 02:04:27 AM
Fresh off the press. 2015 Annual Report.

http://assets.pershingsquareholdings.com/2016/03/PSH-Annual-Report-12.31.151.pdf
Quote
While PSH’s discount to NAV has remained relatively narrow during most of 2015 and early 2016 –
typically less than 5% – in recent weeks, the discount has widened substantially and has averaged about
13% since March 1, 2016. I suspect that this is largely due to fear about the rapid decline in Valeant’s
stock price. At the current discount to NAV of about 12%, an investor is paying almost nothing for our
investment in Valeant.
If you want a free option on Valeant - then that looks a good way to play it.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on March 25, 2016, 06:32:31 AM
It would have been nice if Ackman mentioned his manipulation with option positions in the AR.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: muscleman on March 25, 2016, 07:55:00 AM
If I don't read his letter, I won't know his results are heavily front loaded.  :)
His performance after 2009 isn't that interesting.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: doughishere on March 25, 2016, 08:18:56 AM
If I don't read his letter, I won't know his results are heavily front loaded.  :)
His performance after 2009 isn't that interesting.

You dont read his letter..which translates into you dont read the 10k and as such all you are left with is making jokes....i guess if thats your style.

ADP not interesting CP isnt interesting HHC isnt interesting.....do you love to read about businesses or is this just a hobby?


Quote
Furthermore, in light of the high-water-mark feature of the Fund, investors will pay no incentive fees until NAV increases by 68%, and exceeds $26.37 per share. 

Looks like you get bill for free for a while. Free option on Fanie and Freddie also, well not really free. They sent advisors over to VRX. That first third is a pretty good read. I though there was a rather concise


The Govt is tapping pershing square about drug pricing.


 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: doughishere on March 25, 2016, 08:43:05 AM
The VRX position is only a year old.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: johnny on March 25, 2016, 07:21:18 PM
Quote
The Company’s Annual General Meeting will be held in Guernsey on 27 April 2016.

Wonder what the attendance here will be like.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: writser on May 11, 2016, 07:24:32 AM
This was pretty good:

https://www.youtube.com/watch?v=RS8HJT4_Ero
Title: Re: NL:PSH - Pershing Square Holdings
Post by: returnonmycapital on May 11, 2016, 10:53:58 AM
Was it ever.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: fareastwarriors on May 11, 2016, 10:59:18 AM
Quote
The Company’s Annual General Meeting will be held in Guernsey on 27 April 2016.

Wonder what the attendance here will be like.

Doubt there will be many shareholders there.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on May 11, 2016, 03:52:07 PM
Copying Q1 letter from Fannie thread:
http://www.valuewalk.com/wp-content/uploads/2016/05/Pershing-Square-1Q2016-Investor-Letter_May-11-2016_PSH-1.pdf

VRX screw up is still reverberating through PSH portfolio. Ackman sold a bunch of ZTS, MDLZ, CP probably at least partially to deal with losses on VRX options. If not for VRX, the quarter would have been crappy, with VRX it was horrible.

Assuming previously mentioned option positions, future is probably gonna continue to be volatile (see 10% gain in April... and VRX current price).

Disclosure: I still have some PSH.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: muscleman on May 12, 2016, 08:30:20 AM
I find this part especially amusing: "On April 20th, CP reported that first quarter revenue had declined 5%, as a result of the tepid
macro-economic environment. On the earnings call, CP President Keith Creel highlighted that
volumes will likely be down 6% for Q2, but that trends should improve in the second half of the
year as comps get easier.
"   ;D ;D


Oh I feel taller now since I am comparing with dwarfs.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Aurelius on November 17, 2016, 11:31:32 AM
This might be interesting!

There is quite a substantial discount to NAV as per 15 Nov. - 27,7%.
Also worth noting investors will pay no incentive fees until NAV increases by almost 60%, and exceeds $26.37 per share (high water mark).

Title: Re: NL:PSH - Pershing Square Holdings
Post by: johnny on November 17, 2016, 12:15:06 PM
At that price you're almost buying Chipotle at fair value!
Title: Re: NL:PSH - Pershing Square Holdings
Post by: wellmont on November 17, 2016, 01:30:12 PM
I get 19%discount. Calc?

This might be interesting!

There is quite a substantial discount to NAV as per 15 Nov. - 27,7%.
Also worth noting investors will pay no incentive fees until NAV increases by almost 60%, and exceeds $26.37 per share (high water mark).
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Aurelius on November 17, 2016, 01:47:35 PM
I was wrong.

As per 15 Nov: https://www.pershingsquareholdings.com/company-reports/weekly-navs/
NAV was 17.12; price was 13.41.
Discount = 21,7%
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Phaceliacapital on November 18, 2016, 12:06:18 AM
https://www.youtube.com/watch?v=1qhaTir8hRQ

Watch last 5 minutes for those contemplating PSH investment
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Aurelius on November 18, 2016, 04:11:15 AM
Their latest conference call: https://www.pscmevents.com/qcc/
Their portfolio percentages are quite different than what dataroma presents.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: fareastwarriors on November 18, 2016, 08:10:37 AM
https://www.youtube.com/watch?v=1qhaTir8hRQ

Watch last 5 minutes for those contemplating PSH investment


The VRX issue?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: rb on December 07, 2016, 03:15:16 PM
Has anyone tried to arbitrage this thing?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on December 07, 2016, 04:30:18 PM
Has anyone tried to arbitrage this thing?

No idea how to arbitrage, but I couldn't resist picking up a few 80-cent dollar bills.

Below from PSH's 3Q letter -

Pershing Square Holdings’ discount from NAV has increased substantially over the last eight months and was more than 20% as of November 30, 2016. As an investor’s return is a function both of underlying NAV performance and price versus NAV, we find the current discount
unacceptable. We believe the discount is attributable to a number of factors which include our below-expectation performance, and recent capital flows out of the hedge fund industry. We are exploring potential steps to narrow the discount to NAV and expect to report back to investors as
soon as we have decided our intended approach.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: rb on December 07, 2016, 05:15:39 PM
You see I'm not too crazy about their holdings. Your statement implies that their holdings are fully valued. But what if you pick up a $1.00 bill for 1.12 instead of 1.40. That doesn't sound so appealing now does it?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: JBTC on December 07, 2016, 06:57:42 PM
You see I'm not too crazy about their holdings. Your statement implies that their holdings are fully valued. But what if you pick up a $1.00 bill for 1.12 instead of 1.40. That doesn't sound so appealing now does it?

Thanks for the insight. I do also like their holdings. Not everyone but generally.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on January 10, 2017, 12:57:13 AM
I have opened a new position in PSH.
I think there are two differences from the time I first opened (and later closed at a small loss) a position in the company:
1) First of all, and most important, Bill Ackman has just suffered his worst performance in 13 years. And he should be a much humbler investor than he was a couple of years ago. If it is not so, my thesis is wrong and I'll sell again.
2) Discount to NAV is meaningful (15%), while NAV has increased for the last 3 quarters: it seems that bad performance has ended. If truly so, it should be just a matter of time before the gap between share price and NAV gets closed.
We will see!

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Mephistopheles on January 10, 2017, 02:33:18 AM
I'm not familiar with valuing investment managers, but is a small amount of that discount warranted due to the management/performance fees? In other words, would nav be slightly above fair value, assuming the holdings are fairly valued?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on January 10, 2017, 03:22:06 AM
I'm not familiar with valuing investment managers, but is a small amount of that discount warranted due to the management/performance fees? In other words, would nav be slightly above fair value, assuming the holdings are fairly valued?

I am not sure. But, if you take a look at Personal Assets Trust latest Quarterly Report (in attachment), you see their share price is sligthly higher than NAV. (And they do not enjoy Ackman's track record, which even after the VRX debacle is still a 15% compounded annual for the last 13 years, a cumulative 500%).

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: petec on January 10, 2017, 05:26:16 AM
That's true Gio but I think Personal Assets has a discount control mechanism whereby they buy below NAV and issue above.   Several UK investment trusts have this.   Some that don't, e.g. Caledonia, trade at significant discounts (20% in that case but most are nearer 10%).

I would argue against having a discount for management costs simply because open-ended fund structures trade at par yet they still charge a fee, and suffer structural disadvantages (the capital isn't permanent, they can't lever, etc.).

The more pertinent argument for a discount, I think, is the liquidity or otherwise of the underlying.   For example Caledonia's discount is high because it does a lot of private equity so the liquidity is low and you have to trust management's valuations.

Pete

PS The other reason for Personal's low discount is that it is so conservatively invested!   As is Capital Gearing Trust which also has a good record.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: writser on January 10, 2017, 06:11:02 AM
I'm not familiar with valuing investment managers, but is a small amount of that discount warranted due to the management/performance fees? In other words, would nav be slightly above fair value, assuming the holdings are fairly valued?

I am not sure. But, if you take a look at Personal Assets Trust latest Quarterly Report (in attachment), you see their share price is sligthly higher than NAV. (And they do not enjoy Ackman's track record, which even after the VRX debacle is still a 15% compounded annual for the last 13 years, a cumulative 500%).

Cheers,

Gio

They also do not enjoy Ackman's fee record, which even after the VRX debacle is still 1.5% + 16%.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on January 10, 2017, 06:29:10 AM
Thank you Pete,
actually you can see on their site how share price has compared to NAV until the first half of 2015, when sentiment was not so negative yet: the average discount had been around 7-8%, with some weeks in which the disocunt had shrank to 3-4%.
Anyway, I agree: it is not really the discount to NAV that matters.

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on January 10, 2017, 06:34:01 AM
They also do not enjoy Ackman's fee record, which even after the VRX debacle is still 1.5% + 16%.

True. But investors won't pay incentive fees until NAV exceeds $26.37 per share.

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Mephistopheles on January 10, 2017, 02:04:01 PM
I'm not familiar with valuing investment managers, but is a small amount of that discount warranted due to the management/performance fees? In other words, would nav be slightly above fair value, assuming the holdings are fairly valued?

I am not sure. But, if you take a look at Personal Assets Trust latest Quarterly Report (in attachment), you see their share price is sligthly higher than NAV. (And they do not enjoy Ackman's track record, which even after the VRX debacle is still a 15% compounded annual for the last 13 years, a cumulative 500%).

Cheers,

Gio

I think any assessment of Ackman's track record should include Gotham. Any info available on the combined returns of both funds? Wouldn't be surprised if it trails the market after fees.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on January 10, 2017, 02:27:29 PM
I'm not familiar with valuing investment managers, but is a small amount of that discount warranted due to the management/performance fees? In other words, would nav be slightly above fair value, assuming the holdings are fairly valued?

I am not sure. But, if you take a look at Personal Assets Trust latest Quarterly Report (in attachment), you see their share price is sligthly higher than NAV. (And they do not enjoy Ackman's track record, which even after the VRX debacle is still a 15% compounded annual for the last 13 years, a cumulative 500%).

Cheers,

Gio

I think any assessment of Ackman's track record should include Gotham. Any info available on the combined returns of both funds? Wouldn't be surprised if it trails the market after fees.

True.
But I didn't mention Ackman's track record as a reason why I think an investment in PSH today might turn out better than my previous investment a couple of years ago.
Basically, I think then was a time of great optimism (therefore a smaller discount share price to NAV) and Ackman was too self confident (therefore more risk), now instead is a period of great pessimism (therefore a larger discount share price to NAV) and (I hope) Ackman might be more prudent (therefore less risk).
If this is not the case, as I have said, I am wrong and I'll sell again.

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: awindenberger on January 10, 2017, 07:50:14 PM
I've been thinking the same Gio. Assuming Ackman delivers his usual returns going forward, the discount to NAV will almost certainly shrink.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: DeepSouth on January 10, 2017, 08:51:10 PM
I've been thinking the same Gio. Assuming Ackman delivers his usual returns going forward, the discount to NAV will almost certainly shrink.

How much of Ackman's cumulative return in Pershing Squared is from GGP? ASs to learning his lesson, Gotham Golf and Target didn't teach him a lesson, I don't see why Valeant will. Read Confidence Game to get a better view of his blinding hubris.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: arcube on January 10, 2017, 09:33:30 PM
I've been thinking the same Gio. Assuming Ackman delivers his usual returns going forward, the discount to NAV will almost certainly shrink.

How much of Ackman's cumulative return in Pershing Squared is from GGP? ASs to learning his lesson, Gotham Golf and Target didn't teach him a lesson, I don't see why Valeant will. Read Confidence Game to get a better view of his blinding hubris.
+1. Also let's not forget JC Penney.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on January 10, 2017, 10:15:48 PM
I've been thinking the same Gio. Assuming Ackman delivers his usual returns going forward, the discount to NAV will almost certainly shrink.

How much of Ackman's cumulative return in Pershing Squared is from GGP? ASs to learning his lesson, Gotham Golf and Target didn't teach him a lesson, I don't see why Valeant will. Read Confidence Game to get a better view of his blinding hubris.
+1. Also let's not forget JC Penney.

This imo is not completely true.
What I like about Ackman is his entrepreneurial bent: he tries to add something useful to the companies he invest in and to create value.
In business not everything you try turns out right. You might even have good ideas and yet fail to achieve good results. That's imo just an unavoidable part of the game.
Target and JC Penney have taught Ackman that retail is very hard and therefore to stay away from it, even if you think you might be able to come up and implement good strategies... Much more than Lampert has learnt, it seems...
What matters the most imo is that he never lost a large % until VRX: precisely because in business you never can be sure, you should not be too confident to bet the future of your company on a single endeavor. Ackman instead has acted too sure of himself with Valeant (bet too much at a price that clearly was too high), probably because the Allergan trade had turned so spectacularly well for him the year before.
Something bad happened with VRX (as we all know), and he was severely punished for his arrogance.
With this lesson, I hope, Ackman might be a humbler and more prudent investor going forward.

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on January 11, 2017, 12:27:27 AM
Anyway, I want to be clear that I agree Ackman has a lot to prove. It is possible that nothing has really changed... If I see him betting too heavily on a single investment again, I will surely sell.

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on January 20, 2017, 01:12:55 AM
Does it make any sense for KHC to buy MDLZ?
Does it make any sense for QSR to buy CMG?
Which of the two has the highest chance to materialize?

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Phaceliacapital on January 20, 2017, 01:36:52 AM
KHC MDLZ definitely makes sense.

Question to Gio, why not Bollore instead of PSH?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on January 20, 2017, 02:48:36 AM
KHC MDLZ definitely makes sense.

Question to Gio, why not Bollore instead of PSH?

I guess because I simply don't follow Bollore...
Do they look for strategic deals like PSH does? Are there other similarities?

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on January 20, 2017, 06:23:50 AM
I have found this article about Bollore:
Follow ‘Buffett of France’ for a Three-Year Double: http://www.barrons.com/articles/follow-buffett-of-france-for-a-three-year-double-1482491739

It looks interesting and still cheap at today's price of $3.90 per share.

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: giofranchi on February 06, 2017, 08:29:02 AM
I am out again...
The "Soda and Junk Food" trend really bothers me: and almost 45% of PSH's capital is invested in MDLZ, QSR, and CMG. If the "Soda and Junk Food" trend gets momentum in the coming years, I think all of them will suffer... or at least they probably won't grow enough to justify their current valuations.
I believe also SBUX might suffer, and also SBUX should go on growing at an healthy rate to justify its present share price: I wanted to reduce my portfolio's exposure to the "Soda and Junk Food" trend, and decided to sell PSH while keeping the SBUX investment.
It was a small position and I replaced it with a small position in XBI.

Cheers,

Gio
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Foreign Tuffett on July 24, 2017, 12:00:21 AM
Based on the week CMG just had, Pershing Square looks to be headed for another tough year. Unless Ackman and his team can turn things around in the next five months it will be Pershing's 3rd down year in a row. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: valueyoda on July 24, 2017, 07:03:46 AM
Actually, if you think CMG is close to a bottom, PSH looks appealing with a NAV above $17, especially given the ongoing buybacks by Pershing Square.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: cmlber on July 24, 2017, 09:32:31 AM
Actually, if you think CMG is close to a bottom, PSH looks appealing with a NAV above $17, especially given the ongoing buybacks by Pershing Square.

The NAV for this vehicle isn't really the "net" asset value.  You don't own a pro rata share in the underlying, you own a pro rata share in the underlying PLUS a perpetual liability equal to 1.5% of "NAV" annually and 16% of profits after hitting the high water mark.

If you think the underlying investments will earn 10%/year, without taking into account the performance fees, this should trade at a 15% discount to NAV.  If you think the underlying investments won't outperform the S&P 500, probably more like a 20-25% discount to NAV. 

A bet on PSH is a bet that Ackman can outperform like he has in the past.  That may be true, but there's no margin of safety in the discount to NAV if it turns out not to be true.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gray Fox on July 25, 2017, 09:40:25 AM
Based on the week CMG just had, Pershing Square looks to be headed for another tough year. Unless Ackman and his team can turn things around in the next five months it will be Pershing's 3rd down year in a row.

3rd down year is quite the understatement.

2015: SPTR up 1.38%, PSH -20.5%
2016: SPTR up 11.96%, PSH -13.5%
2017: SPTR up 11%, PSH -4% through July 18, probably closer to 6% now

He is on pace to underperform the S&P 500 by 20 percentage points three years in a row.  The public vehicle opened at $25 and the NAV is currently at $17.42. 

Even over a 10 year basis his LPs in the private fund are roughly in line with the S&P 500.  Start at 2007 and tack on returns so far this year.  Link below.  The LPs have got about 9% annually vs. 8% for the S&P 500.  His 1/3/5 year #s are terrible.  The entirety of his out performance for the life of the fund ties back to when he was running a small fraction of the assets. 

He has had some outstanding winners and is a charismatic guy.  I don't want to discredit the good ones.  MBIA/GGP were great calls.  AGN was a coup but I still conceptually can't see how it is NOT insider trading.  On an absolute dollar basis I would guess he has lost money for investors.  Running a $10bn fund is so much different than a <$1bn fund doing a lot of special situation work. 

https://assets.pershingsquareholdings.com/media/2014/09/28204101/PSH-Annual-Report_12.31.16.pdf
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Peregrino on July 27, 2017, 06:36:22 AM

The NAV for this vehicle isn't really the "net" asset value.  You don't own a pro rata share in the underlying, you own a pro rata share in the underlying PLUS a perpetual liability equal to 1.5% of "NAV" annually and 16% of profits after hitting the high water mark.

If you think the underlying investments will earn 10%/year, without taking into account the performance fees, this should trade at a 15% discount to NAV.  If you think the underlying investments won't outperform the S&P 500, probably more like a 20-25% discount to NAV. 

A bet on PSH is a bet that Ackman can outperform like he has in the past.  That may be true, but there's no margin of safety in the discount to NAV if it turns out not to be true.

NAV is a liquidation value metric, no?  As such, including a discount for the perpetual liability of fees wouldn't seem to apply.  If you took control, sold all the assets at today's market price and paid off all creditors, you would be left with the NAV. 

If it were the case, then even a Vanguard fund or an ETF should perpetually trade at a discount to the index it references. 

Of course, you are correct, that someone who buys PSH does so in the belief that at its current market price it will, net of fees, return more than the broad market indices (or perhaps provide an adequate return net of fees with less volatility than the market).

No position in the stock and no opinion about PSH's ability to generate future returns sufficient to justify paying these fees.

I do, however, have a pet theory about offerings like PSH based on nothing firmer than intuition.  That theory is that whenever fund managers establish perpetual capital vehicles, it's a sign to me that they've topped out. 

I am basing this intuition mostly on what I infer the desire to manage a perpetual capital vehicle says about the PM's psychology.  If you manage an open vehicle, and are doing well, there's no need to ever fear that your investors will pull enough money from you such that you will be put out of business.  Even in extremis (a la 2008) good managers made it through with enough capital still at their disposal to put up good numbers. 

Establishing a perpetual capital vehicle, however, communicates that perhaps you are a bit worried that the past record may not hold up in future, that you like living in the manner to which you have become accustomed, speaking at conferences, saving the victims of pyramid schemes, and want some insurance against being put out of business. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kiwing100 on May 29, 2018, 03:29:03 AM
Revisiting Buffett talking about diversification is for the know nothing investor.

From the 2008 Berkshire meeting

" .... several times I had 75 percent of my net worth in one situation.
There are situations you will see over a long period of time. I mean, you will see things that it would be a mistake — if you’re working with smaller sums — it would be a mistake not to have half your net worth in.

I mean, there — you really do, sometimes in securities, see things that are lead-pipe cinches. And you’re not going to see them often and they’re not going to be talking about them on television or anything of the sort, but there will be some extraordinary things happen in a lifetime where you can put 75 percent of your net worth or something like that in a given situation."

Now PSH runs a concentrated portfolio and has shown us how portfolio concentration can go wrong ...

To my knowledge, Pershing Square has had 3 investments that were mistakes and resulted in a loss of significant capital - 1) Target 2) JC Penny 3) Valeant.

If an investor chooses portfolio concentration approach, they cannot afford to make mistakes.  There is a fine line knowing the edge of your circle of competence ....

A concentrated portfolio approach also means that the investor batting average needs to be high and is vulnerable to even a low error rate.

If Pershing Square had invested 50-75% in one of the above ideas where they lost a significant portion of their capital, who knows if Pershing Square Management would have continued in business.  If Pershing Square Management had not continued in business, then Ackman may have started another fund (after all he is on his second fund after Gotham Capital) ...
Title: Re: NL:PSH - Pershing Square Holdings
Post by: JRM on May 29, 2018, 04:20:36 AM
In some of his early holdings Buffett was an activist investor (Sanborn maps).  When you have the ability to be the catalyst, it must increase your confidence in a position or idea.  I've been lost with Pershing Square's recent "activist" positions. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Spekulatius on May 29, 2018, 04:24:11 AM
With concentrated portfolios, survivorship bias turns its ugly head. You hear a lot more about those few successful ones than you hear about those that lose their money and disappear in the shadows.

None of Ackman’s bets were sure bets. They were turnaround bets (JCP) , leveraged  bets (Target) or jockey bets (VRX). You could also read about all these stocks in the newspaper/media a lot at this time.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: abyli on May 29, 2018, 06:32:03 AM
Revisiting Buffett talking about diversification is for the know nothing investor.

From the 2008 Berkshire meeting

" .... several times I had 75 percent of my net worth in one situation.
There are situations you will see over a long period of time. I mean, you will see things that it would be a mistake — if you’re working with smaller sums — it would be a mistake not to have half your net worth in.

I mean, there — you really do, sometimes in securities, see things that are lead-pipe cinches. And you’re not going to see them often and they’re not going to be talking about them on television or anything of the sort, but there will be some extraordinary things happen in a lifetime where you can put 75 percent of your net worth or something like that in a given situation."

Now PSH runs a concentrated portfolio and has shown us how portfolio concentration can go wrong ...

To my knowledge, Pershing Square had has 3 investments that were mistakes and resulted in a loss of significant capital - 1) Target 2) JC Penny 3) Valeant.

If an investor chooses portfolio concentration approach, they cannot afford to make mistakes.  There is a fine line knowing the edge of your circle of competence ....

A concentrated portfolio approach also means that the investor batting average needs to be high and is vulnerable to even a low error rate.

If Pershing Square had invested 50-75% in one of the above ideas where they lost a significant portion of their capital, who knows if Pershing Square Management would have continued in business.  If Pershing Square Management had not continued in business, then Ackman may have started another fund (after all he is on his second fund after Gotham Capital) ...

Ackman has no clue what he is doing, concentrated or diversified does not matter...
Title: Re: NL:PSH - Pershing Square Holdings
Post by: KCLarkin on May 29, 2018, 07:55:38 AM
Ackman has no clue what he is doing, concentrated or diversified does not matter...

I hate piling onto investors who struggle but it is pretty clear that many, if not most, of his most recent investments were not lead-pipe cinches.

VRX - he bought at almost the peak valuation
JC Penny - was an almost impossible turnaround
Chipotle - Expensive turnaround story
Mondelez - Fairly expensive consumer staple
ADP - Well run, high moat business. But very expensive.
ZTS - Very good but expensive business

A few that I would consider cinches (with at least some hindsight):
CP Rail
GGP
Burger King

Interestingly, most of his cinches were his older ones. Diversification is for the know nothing investor. But it is also for asset gatherers. A concentrated portfolio doesn't scale well.

Ackman should have switched to closet indexing once his track record was established and his AUM exploded. Or he should have limited AUM like most of the other successful concentrated investors do.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: nickenumbers on May 29, 2018, 08:48:20 AM
I think Ackman fails on the patience Quality.  He has all this investor money, high customer expectations and a pretty big mouth.  He feels like a fool if he is not active doing something, showing how smart he is...  active active...



“The big money is not in the buying.... the selling, but in the WAITING.”

"Its waiting that helps you as an investor, and a lot of people just can't stand the WAIT."   Charlie Munger
Title: Re: NL:PSH - Pershing Square Holdings
Post by: LR1400 on August 19, 2018, 05:48:19 PM
How do these people keep getting investor money?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Liberty on March 21, 2019, 09:06:30 AM
Ackman up 31.9% so far this year. WSJ piece about him:

https://www.wsj.com/articles/after-suffering-bruising-losses-ackman-pursues-quiet-recovery-11553176760
Title: Re: NL:PSH - Pershing Square Holdings
Post by: adhital on July 02, 2019, 05:08:41 PM
45% net YTD. Not bad so far..and selling at 70 cents on a dollar.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: muscleman on July 03, 2019, 07:12:44 AM
45% YTD isn't bad, but how is his longer term record?  ;)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: AzCactus on July 03, 2019, 07:51:21 AM
I think it's good and very good if you ignore Valeant and a couple of other decisions  :o
Title: Re: NL:PSH - Pershing Square Holdings
Post by: muscleman on July 03, 2019, 08:51:17 AM
I think it's good and very good if you ignore Valeant and a couple of other decisions  :o

Come on..... I wish I have a magical wand to exclude all losing trades in my portfolio.  ;)

He lost money in 2015, 2016, 2017, 2018. This year's 45% gain merely gets him back to where he was at the end of 2014.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: adhital on July 03, 2019, 09:38:51 AM
I think it's good and very good if you ignore Valeant and a couple of other decisions  :o

Come on..... I wish I have a magical wand to exclude all losing trades in my portfolio.  ;)

He lost money in 2015, 2016, 2017, 2018. This year's 45% gain merely gets him back to where he was at the end of 2014.

That’s why it’s is selling at almost 30% discount to net and liquid asset and  No need to pay any performance fee for next 50% gain.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gregmal on July 03, 2019, 09:44:09 AM
Ackman actually, quite admirably, acknowledged he made some mistakes, did some soul searching and then was active about making the changes he needed to(mainly shutting up, stopping with the TV appearances every 2 days and focusing on research), and seems to have gotten back to basics and is investing in his circle of competence. Not like some others, such as Einhorn who still refuses to admit he is wrong and keeps making the same mistakes, or Tilson who just gave up. Kudos to Bill
Title: Re: NL:PSH - Pershing Square Holdings
Post by: cameronfen on July 03, 2019, 10:14:18 AM
I wouldn't all attribute it to being a "changed" man.  There also a lot of tailwind of having less assets.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: writser on July 03, 2019, 10:41:39 AM
Ackman actually, quite admirably, acknowledged he made some mistakes, did some soul searching and then was active about making the changes he needed to(mainly shutting up, stopping with the TV appearances every 2 days and focusing on research), and seems to have gotten back to basics and is investing in his circle of competence. Not like some others, such as Einhorn who still refuses to admit he is wrong and keeps making the same mistakes, or Tilson who just gave up. Kudos to Bill

Does this narrative explain his recent results? Or did his recent results create this narrative? He has a highly concentrated portfolio. Could be just variance, which investors have a tendency to explain.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gregmal on July 03, 2019, 10:51:20 AM
Ackman actually, quite admirably, acknowledged he made some mistakes, did some soul searching and then was active about making the changes he needed to(mainly shutting up, stopping with the TV appearances every 2 days and focusing on research), and seems to have gotten back to basics and is investing in his circle of competence. Not like some others, such as Einhorn who still refuses to admit he is wrong and keeps making the same mistakes, or Tilson who just gave up. Kudos to Bill

Does this narrative explain his recent results? Or did his recent results create this narrative? He has a highly concentrated portfolio. Could be just variance, which investors have a tendency to explain.

Lowe's, Starbucks, Chipotle, HHC, QSR, these all have a common theme to them which is much more consistent with where he has had success prior. Not exactly small caps either. Much different than the profiles of JCP, VRX, PAH, HLF, etc. Basically stuff that is either highly complex, loaded with debt, or dependent on fixing major structural problems.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: cherzeca on July 03, 2019, 10:52:22 AM
ackman and Berkowitz are similar.  they have outstanding long term records with a great deal of variance.  as for bill, even when he is wrong in outcome, he is often right in process (I would say he correctly analyzed HLF, but misinterpreted what the FTC would do), although not always (valeant was a complete miss). 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on December 16, 2019, 05:52:39 AM
I like PSH NA here at a record 30/31% discount for an IRA of an accredited investor [PFIC].

They are buying back a run rate or so of 4-5% of shares / year, every day in the market, the accretion from that more or less offsets management fees then you get a little moderate leverage from long term bonds  issued by PSH that costs 4.95%. PSH is amazingly back above its high water mark so you'll pay incentive fees. The portfolio quality has improved as the crap has left; major holdings like Berkshire, HHC, Agilent, Starbucks, etc are all "easy to own" at a 30% discount. Ackman is aligned. He owns $700mm of shares, which is meaningful in the context of the money he makes off of the management/incentive fees from external capital. He's acting like an owner rather than parasite by buying back shares.

The "correct" discount is 10-15% in my view. I would expect long term alpha to be -300 to +500 per year and would expect to see discount accretion on a 5 year basis of 300-500 bps as it normalizes. PSH NA is an anomaly in the CEF world in terms of its wide discount with liquid easily understandable balance sheer. So on a 5 year basis, I think one will match the market in a downside case and beat it meaningfully in a base case; there is a wide range of outcomes, but all in I think it's positively skewed. I simply don't see a repeat of the crappiness that was VRX/HLF etc. happening based on the current portfolio. Maybe Fannie Freddie goes to zero and it is actually trading at a tighter discount, but it won't completely impair the portfolio like being loaded to the gills with VRX did.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: EricSchleien on December 16, 2019, 10:47:59 AM
Can it not be in an IRA of an accredited investor?

I like PSH NA here at a record 30/31% discount for an IRA of an accredited investor [PFIC].

They are buying back a run rate or so of 4-5% of shares / year, every day in the market, the accretion from that more or less offsets management fees then you get a little moderate leverage from long term bonds  issued by PSH that costs 4.95%. PSH is amazingly back above its high water mark so you'll pay incentive fees. The portfolio quality has improved as the crap has left; major holdings like Berkshire, HHC, Agilent, Starbucks, etc are all "easy to own" at a 30% discount. Ackman is aligned. He owns $700mm of shares, which is meaningful in the context of the money he makes off of the management/incentive fees from external capital. He's acting like an owner rather than parasite by buying back shares.

The "correct" discount is 10-15% in my view. I would expect long term alpha to be -300 to +500 per year and would expect to see discount accretion on a 5 year basis of 300-500 bps as it normalizes. PSH NA is an anomaly in the CEF world in terms of its wide discount with liquid easily understandable balance sheer. So on a 5 year basis, I think one will match the market in a downside case and beat it meaningfully in a base case; there is a wide range of outcomes, but all in I think it's positively skewed. I simply don't see a repeat of the crappiness that was VRX/HLF etc. happening based on the current portfolio. Maybe Fannie Freddie goes to zero and it is actually trading at a tighter discount, but it won't completely impair the portfolio like being loaded to the gills with VRX did.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on December 16, 2019, 11:24:58 AM
ownership by US persons is tricky, period. In fact, it's questionable whether an IRA of an accredited person can own it. It would be best to be owned in an IRA that's not a rollover or would not be considered ERISA money.

Owning in a taxable account is a no go unless you want to file PFIC form and have it taxed in an onerous fashion.

One can buy the less liquid ADR in a non rollover IRA of an accredited investor and I think that it's okay from what I've read.


The Placing Shares have not been and will not be registered under the applicable securities laws of the United States, Australia, Canada, Japan, New Zealand or South Africa. Subject to
certain exceptions, the Placing Shares may not be offered or sold within the United States, Australia, Canada, Japan, New Zealand or South Africa or into any other jurisdiction where to
do so would constitute a violation of applicable laws or regulations of such other jurisdiction or to any national, resident or citizen thereof. The Placing Shares may not be offered or sold to
or for the account or benefit of U.S. persons (‘‘U.S. Persons’’) as defined in Regulation S (‘‘Regulation S’’) under the U.S. Securities Act of 1933, as amended (the ‘‘Securities Act’’).
The Placing Shares are being offered and sold only to non-U.S. Persons in the Netherlands and selected other jurisdictions in offshore transactions in reliance on Regulation S, provided
such persons are also Qualified Eligible Persons (‘‘QEPs’’) under U.S. Commodity Futures Trading Commission (‘‘CFTC’’) Rule 4.7.
Neither the U.S. Securities and Exchange Commission (the ‘‘SEC’’) nor any U.S. state securities commission has approved or disapproved of the Placing Shares, nor have they passed upon
or endorsed the merit of the Placing or the accuracy or completeness of this Prospectus. Any representation to the contrary is a criminal offence in the United States. The Company has not
registered as an investment company under the U.S. Investment Company Act of 1940, as amended (the ‘‘Investment Company Act’’), and investors will not be entitled to the benefits of
that Act.
The Placing Shares may not be acquired by: (i) investors using assets of: (A) an ‘‘employee benefit plan’’ as defined in Section 3(3) of the U.S. Employee Retirement Income Security Act
of 1974, as amended from time to time (together with the applicable regulations thereunder, ‘‘ERISA’’), that is subject to Title I of ERISA; (B) a ‘‘plan’’ as defined in Section 4975 of the
U.S. Internal Revenue Code (the ‘‘IRC’’), including an individual retirement account or other arrangement that is subject to Section 4975 of the IRC; or (C) an entity which is deemed to
hold the assets of any of the foregoing types of plans, accounts or arrangements that is subject to Title I of ERISA or Section 4975 of the IRC (‘‘ERISA Plans’’); or (ii) a governmental,
church, non-U.S. or other employee benefit plan that is subject to any federal, state, local or non-U.S. law that is substantially similar to the provisions of Title I of ERISA or Section 4975
of the IRC.
Each Manager is acting exclusively
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thowed on December 16, 2019, 04:01:47 PM
Cheers for this - it's good to hear an opposing view.  I felt like I was 'too late' on this given the performance YTD.  But the discount has been impressively stubborn - after the 1-2 Valeant / Herbalife hubris, I suppose it will take a while for people to fully regain confidence in him.

But it's a good point - it's a pretty solid portfolio of decent liquid stocks - and arguably in a bad case scenario acts as a S&P500 tracker at a hefty discount.

I still don't like the idea of him, as a textbook example of the smug 'Christopher Wool' owning class.  But this is the sort of thing that is fairly obvious in retrospect, and I often miss out on.

Next - is it too late to buy UK Smlr Cos Investment Trusts......





Title: Re: NL:PSH - Pershing Square Holdings
Post by: Liberty on February 05, 2020, 11:16:23 AM
2019 presentation:

https://assets.pershingsquareholdings.com/2020/02/05122230/PSCM-Annual-Investor-Update-Presentation.pdf
Title: Re: NL:PSH - Pershing Square Holdings
Post by: ukvalueinvestment on February 05, 2020, 11:40:16 PM
I think this is deserving of a large discount given Ackman's history and high fee structure, but the discount is a somewhat too high.  I would own this as an alternative to an S&P tracker.  But that's not to say I want to own too much of the S&P right now.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thowed on February 06, 2020, 05:00:07 AM
Should point to UK people e.g. UKValueInvestor that this is not an ideal purchase as they no longer have UK Reporting Fund status, so if you have Capital Gains they'll be taxed at Income Tax rates. 

Don't know reason for doing this, no small funds have a problem with it, so it comes across as another case of idiot, shareholder-unfriendly behaviour from the Ackmann camp.

On a pure stock level though, agree that it's still probably attractive at such a big discount.

For further unfriendly behaviour, see here:
https://citywire.co.uk/investment-trust-insider/news/avi-attacks-ackman-s-pershing-square-over-outrageous-borrowing/a1250697
Title: Re: NL:PSH - Pershing Square Holdings
Post by: ukvalueinvestment on March 09, 2020, 02:13:00 PM
It's starting to look interesting now that the S&P is cheaper and Ackman has said he bought downside protection.  Holding it in an ISA would get over the capital gains tax issue?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: muscleman on March 18, 2020, 12:14:18 PM
https://www.cnbc.com/2020/03/18/bill-ackman-pleads-to-trump-to-increase-closures-to-save-the-economy-shut-it-down-now.html

Is it just me or does anyone else have a feeling that Bill is crying on the phone?
He said he was bearish and took a lot of measures. I see that as non-sense to calm down investors. PSH has been tanking just like the market. If he has taken the measures to adjust his portfolio, this wouldn't have happened.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: kab60 on March 18, 2020, 12:16:36 PM
PSH hasn't tanked like the market? They gave an update the other day, seems they bought a bit (a lot) of downside protection which more than covered their losses on the long. But that was days ago... (didn't hear the interview)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: muscleman on March 18, 2020, 12:39:29 PM
PSH hasn't tanked like the market? They gave an update the other day, seems they bought a bit (a lot) of downside protection which more than covered their losses on the long. But that was days ago... (didn't hear the interview)

They are down from 21 to 14. I guess that's roughly in line with the market.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: longterminvestor on March 18, 2020, 12:49:31 PM
If you look at portfolio, his world doesn't look great with exception to Berkshire so we know why he is crying (% is showing portfolio allocation):

HLT      Hitlon CONSUMER DISCRETIONARY                      19.08%
LOW      Lowes CONSUMER DISCRETIONARY                      16.81%
CMG      Chipotle CONSUMER DISCRETIONARY                      16.75%
QSR      Restaurant Brands  CONSUMER DISCRETIONARY     15.67%
BRK.B   Berkshire FINANCE                                               14.82%
SBUX   Starbucks  CONSUMER DISCRETIONARY               7.82%
HHC      Howard Houghes REAL ESTATE                               4.54%
A      Agilent Tech  INFORMATION TECHNOLOGY               4.52%

this is off of 13F filed 12/31 with recent 13D 2/24 filed showing reduction in Chipotle.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: ukvalueinvestment on March 18, 2020, 12:52:03 PM
He hedged his whole portfolio with puts.  Hero move.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Castanza on March 18, 2020, 01:01:04 PM
Bill has no business saying things like "We will see millions dead." I generally agreed with what he said, but his "activism" should begin and stop at the business/investor role.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: johnny on March 18, 2020, 01:03:25 PM
He shut down the office Feb 27, so it is definitely true that he was early on the virus.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: johnny on March 18, 2020, 01:03:47 PM
He hedged his whole portfolio with puts.  Hero move.

Source?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on March 18, 2020, 01:22:34 PM
https://www.barrons.com/articles/bill-ackman-pershing-square-capital-fund-coronavirus-notional-hedges-51583335358

https://www.pershingsquareholdings.com/company-reports/weekly-navs/

his NAV was up in MArch as of the last report when market down. he definitely put on some convex hedges, but we don't know (and he specifically said he wouldn't say) the exact nature of those.

Pershing Square is very cheap and particularly attractive because you're buying a discounted portfolio of risk assets with tail hedges in there. now he could take them off too soon or it could otherwise go awry somehow, but its super interesting.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: johnny on March 18, 2020, 01:59:16 PM
Yeah, if he covered the downside, you're buying at 50% NAV...and there's going to be a pretty serious restoration of the Bill Ackman Glow the story starts being marketed as the Trade of the Pandemic.

Just a question of whether or not naive, humble Bill Ackman will be able to make the most out of the trade, publicity wise. Anybody else concerned here???
Title: Re: NL:PSH - Pershing Square Holdings
Post by: longterminvestor on March 18, 2020, 02:05:11 PM
Tinfoil alert.  I hope, for the shareholders of Pershing Square, Ackman's counter parties on his hedge can deliver.   
Title: Re: NL:PSH - Pershing Square Holdings
Post by: ukvalueinvestment on March 18, 2020, 02:06:11 PM
Bill has no business saying things like "We will see millions dead." I generally agreed with what he said, but his "activism" should begin and stop at the business/investor role.

Dude - he said one million and, like he said, it's just maths.  He clearly made the caveat that he was talking about a situation where the government does nothing, and he does not expect that.  But it is the case that without stronger action, one million at least will die.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thowed on March 18, 2020, 03:48:50 PM
Awaiting the weekly NAV update with great interest.

I have a great frustration with the funds who have hedges but won't detail them.  Makes it impossible to value.

I don't see why the need for secrecy, assuming they're not single stock shorts?

I presume his portfolio would be toast without the hedges, given it's so heavy on restaurants and hotels (though I know that's probably mitigated as there's a lot of franchising involved).

The 42% discount is still a bit of a mystery after last year's performance, though I can see why many people might be suspicious of him, given the 'personality' of Ackman, and the inconsistent performance.




Title: Re: NL:PSH - Pershing Square Holdings
Post by: Orchard on March 18, 2020, 04:17:38 PM
To invest in a fund that's hedged is fairly stupid.

You're paying fees to stay flat.

If you like a hedged fund, keep your cash instead.

Invest it once you don't feel the need to be hedged.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on March 18, 2020, 04:21:01 PM
I would buy a hedged $1 for $0.5. If it doesn't grow and is returned to you in 10 years, that's 7% safe return. In actuality, I'd expect it to re-rate once folks see NAV didn't go down and/or when CEF discounts normalize if/when panic subsides.

Also, most view it the opposite, PSH was an anamoly for charging incentive on unhurdled long only exposure, now it’s just any old hedge fund.

The NAV is more stable and the NAV multiple blew out, should be at $22 not $15
Title: Re: NL:PSH - Pershing Square Holdings
Post by: johnny on March 18, 2020, 05:36:35 PM
Amazing
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on March 18, 2020, 08:02:05 PM
nice, 57% of NAV if it doesn't trade up tomorrow. buying billy's portfolio for 57 cents ain't bad, fees and all.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: investmd on March 18, 2020, 09:15:48 PM
Amazing

For all the dates listed - it trades at a discount of approx 25% to NAV - why?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: mcliu on March 18, 2020, 09:18:03 PM
Amazing

For all the dates listed - it trades at a discount of approx 25% to NAV - why?

I think a combination of management fees, low liquidity, holdco discount, persistent fear Ackman does something stupid like Valeant?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: BG2008 on March 18, 2020, 09:54:53 PM
I am super curious how Pershing Square hedged their portfolio.  I bought puts as well and are up 10-40x across a dozen names.  But my portfolio is not holding up as pretty as PSH.  If anything PSH's long portfolio has probably gotten hit harder than mine.     
Title: Re: NL:PSH - Pershing Square Holdings
Post by: BG2008 on March 18, 2020, 09:56:02 PM
nice, 57% of NAV if it doesn't trade up tomorrow. buying billy's portfolio for 57 cents ain't bad, fees and all.

Is there a PFIC issue owning Pershing Square? Some sort of tax issue?  I vague recall that was the case.  I don't own any Fairfax India for that specific reason. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on March 18, 2020, 11:36:28 PM
nice, 57% of NAV if it doesn't trade up tomorrow. buying billy's portfolio for 57 cents ain't bad, fees and all.

Is there a PFIC issue owning Pershing Square? Some sort of tax issue?  I vague recall that was the case.  I don't own any Fairfax India for that specific reason.

Yes, Pershing is PFIC. You can still hold it in IRA without tax issues (presumably, I'm not your tax professional and all that). There might be complications with 401(k) due to ERISA regulations. Consult your tax professional. Read this thread from beginning or reconsult thepupil ( https://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/pshne-pershing-square-holdings/msg390736/?topicseen#msg390736 )
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Okonomen on March 19, 2020, 02:31:24 AM
Yes PSH looks cheap right now, but as has been stated before, they are VERY exposed to hotels, restaurants and general consumer retail. I dont even dare to think about Hiltons next couple of Q earnings. If the whole world stands still these stocks will show disastrous reports. i know the long term value will be another story, but I'm also thinking... what about debt covenants?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: ukvalueinvestment on March 19, 2020, 03:11:35 AM
Not relating to Hilton - but more as a general point:

There is going to be a vast amount of forgiveness on debt covenants globally because:

- Politically, you can't be bankrupting hospitality businesses (lots of which are family owned) because of this.  Lots of governments have already announced specific measure.

- Banks want to forgive because:
- Their core business is making sound loans.  If they defaults 50% of their loan book they themselves will probably default.  There is no reason to default Hilton if their long term business is sound.  Also banks just don't have the personnel to be working on the Hiltons of this world when there are far more complicated issues in their loan books where they do need to put the workout team to work.  Extract a little flesh from the Hilton's but not too much and move on.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Okonomen on March 19, 2020, 03:30:47 AM
Not relating to Hilton - but more as a general point:

There is going to be a vast amount of forgiveness on debt covenants globally because:

- Politically, you can't be bankrupting hospitality businesses (lots of which are family owned) because of this.  Lots of governments have already announced specific measure.

- Banks want to forgive because:
- Their core business is making sound loans.  If they defaults 50% of their loan book they themselves will probably default.  There is no reason to default Hilton if their long term business is sound.  Also banks just don't have the personnel to be working on the Hiltons of this world when there are far more complicated issues in their loan books where they do need to put the workout team to work.  Extract a little flesh from the Hilton's but not too much and move on.

I understand ur argument but at the end of the day banks cannot "forgive" such a large share of clients. For how long will they have to "forget" the covenants?? I see a potential huge domino effect here and potential chap 11's with dilution. The government are talking much about helping airlines etc but what about regular retailers or other businesses that rely on consumption?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: ukvalueinvestment on March 19, 2020, 03:43:12 AM
I am still working under the assumption that we are at the depths of confusion and uncertainty and things will get better and more orderly over next few weeks.

Hilton is at the bottom of the list in terms of customers that banks and the government want to put into default.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: SharperDingaan on March 19, 2020, 03:55:51 AM
Not relating to Hilton - but more as a general point:

There is going to be a vast amount of forgiveness on debt covenants globally because:

- Politically, you can't be bankrupting hospitality businesses (lots of which are family owned) because of this.  Lots of governments have already announced specific measure.

- Banks want to forgive because:
- Their core business is making sound loans.  If they defaults 50% of their loan book they themselves will probably default.  There is no reason to default Hilton if their long term business is sound.  Also banks just don't have the personnel to be working on the Hiltons of this world when there are far more complicated issues in their loan books where they do need to put the workout team to work.  Extract a little flesh from the Hilton's but not too much and move on.

This only works as long as the same old, same old, continues to prevail.
The Hiltons are indeed great businesses, and that's the problem ....
 
An enterprising lad simply makes the banks overworked workout team a very good offer for the Hilton debt, at cents on the dollar. Then forces a swap of the debt for 25%+ of the equity after dilution; to obtain a large equity slug - that the existing owners would never otherwise have parted with in a million years. Stink up the place, and as soon as the business recovers; the existing owners make our odious lad an offer for the equity that cannot be refused. Reject the first few bids, then eventually accept one.

Everyday practice in the seedier parts of town. The only difference here, is better quality clothes.
The families partied hard, blew it, and now the debt collectors are here. Rags to rags in 'X' generations, just doing its thing.

SD
 

Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on March 19, 2020, 06:38:59 AM
initiated today in the ADR in an IRA of an accredited investor (I think that protects me from PFIC).

Leaving a few bullets in the chamber as clearly the hedges aren't perfect, the portfolio has modest long-term leverage with the bonds and I expect more volatility.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Spekulatius on March 19, 2020, 08:00:31 AM
I am still working under the assumption that we are at the depths of confusion and uncertainty and things will get better and more orderly over next few weeks.

Hilton is at the bottom of the list in terms of customers that banks and the government want to put into default.

Hilton is a capital light business that provides branding and marketing support to the real owners Hotels. I am not sure about Hilton, but I think MAR gives performance guarantees to franchisees for newbuild Hotels, which allows them to get cheap loans. That would be something to look at in Hilton’s 10-k‘s.

Bailing out Hilton will do very little to help the Hotel owner who has mortgage loans and employees to pay. They will bear the brunt of the downturn and may net helps to prevent them going under. Hilton itself („
as well as MAR and IHG)  are just the somewhat symbiotic leech on top of the Hotel ecosystem and capital structure, similar to GP‘s in MLP‘s. The whole system is also similarly levered.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: johnny on March 23, 2020, 02:23:11 AM
Around 188,000 shares repurchased on March 20, at around $14, around $2M in NAV discount captured. I guess that works out to about a penny increase in NAV per share. Congrats, all.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on March 24, 2020, 07:49:35 AM
https://finance.yahoo.com/news/bill-ackman-makes-2-5-181343209.html

going all in, took off all the hedges, good times. loved the stable NAV at 60 cents on the dollar, love the levered beta at 60 cents on the dollar.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Liberty on March 25, 2020, 12:35:46 PM

https://pershingsquareholdings.com/pershing-square-capital-management-l-p-releases-letter-to-investors/

Quote
On March 23rd, we completed the exit of our hedges generating proceeds of $2.6 billion for the Pershing Square funds ($2.1 billion for PSH), compared with premiums paid and commissions totaling $27 million, which offset the mark-to-market losses in our equity portfolio. Our hedges were in the form of purchases of credit protection on various global investment grade and high yield credit indices. Because we were able to purchase these instruments at near-all-time tight levels of credit spreads, the risk of loss from this investment was minimal at the time of purchase.

https://www.youtube.com/watch?time_continue=12&v=koP9HID3sWE&feature=emb_logo
Title: Re: NL:PSH - Pershing Square Holdings
Post by: abitofvalue on March 25, 2020, 07:45:54 PM

https://pershingsquareholdings.com/pershing-square-capital-management-l-p-releases-letter-to-investors/

Quote
On March 23rd, we completed the exit of our hedges generating proceeds of $2.6 billion for the Pershing Square funds ($2.1 billion for PSH), compared with premiums paid and commissions totaling $27 million, which offset the mark-to-market losses in our equity portfolio. Our hedges were in the form of purchases of credit protection on various global investment grade and high yield credit indices. Because we were able to purchase these instruments at near-all-time tight levels of credit spreads, the risk of loss from this investment was minimal at the time of purchase.

https://www.youtube.com/watch?time_continue=12&v=koP9HID3sWE&feature=emb_logo

so roughly 100x in a matter of weeks.  Nuts..  makes up for some of the Valeant losses.  he is an intersting one - gets 100x on this, like mult-100x on GGP and then does Target / Valeant / JCP.. .
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gregmal on March 25, 2020, 07:53:37 PM
Ackman is a character, but absolutely worth paying attention to. Very similar to Berkowitz. Does a lot of shit that initially you think is crazy, half the time it turns out to be genius, the other half it just ends up being crazy.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thowed on March 26, 2020, 03:00:05 AM
Ackman is a character, but absolutely worth paying attention to. Very similar to Berkowitz. Does a lot of shit that initially you think is crazy, half the time it turns out to be genius, the other half it just ends up being crazy.

Thanks, I think this sums it up perfectly.  I keep on being tempted to invest because of the genius stuff, but I pause because you never know if next year is going to be crazy...
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on March 26, 2020, 06:04:05 AM
the fee/liquidity/and general CEF discount do give you a 40% head start on that crazy genius. People invest in far crazier things at lower discounts. In the end, he owns a lightly levered (actually not so much anymore given cash, but there are long term bonds), portfolio of blue chip stocks. This may change before you can react, but nothing is risk free and you can have a perfectly clean story or a cheap stock, not both.

there are larger discounts out there (fellow Amsterdam listed pupil holding Tetragon Financial trades for a 65-75% discount for example) but Tetragon has no high watermark, 14% of its NAV in CLO equity and a large percent in the mark to model value of asset management companies, it's a far worse structure and far less transparent.

Show me a cheaper blue chip equity CEF!

the dude blew 10 years of track record in valeant, you think he's going to get 20-30% long a super highly levered company again? I just don't think so.

Owning HHC, Berkshire, Starbucks, hilton w/ light leverage at a 40% discount is attractive. the low-risk 100x to protect NAV in the worst sell-off in some time doesn't hurt either.



Title: Re: NL:PSH - Pershing Square Holdings
Post by: ukvalueinvestment on March 26, 2020, 06:10:08 AM
I agree.  I just think this is a very good alternative to an S&P500 index fund.  There's a lot that can "go right". He could not do crazy things and outperform.  He could liquidate the fund.  The discount could close given his outperformance over last 2 years.  He continues to buy back stock.

He has publicly said he will no longer do "crazy things" and has gone back to basics, which is burned out by his actions over 2 years.

I am mulling whether to buy this or a levered ETF when I judge that the Pandemic newsflow has bottomed and there is a path out of this mess.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: james22 on March 26, 2020, 11:39:15 AM
He has publicly said he will no longer do "crazy things" and has gone back to basics, which is burned out by his actions over 2 years.

Does he think buying up Fannie Mae/Freddie Mac crazy?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: johnny on March 26, 2020, 12:19:16 PM
Yeah, I've made this a pretty substantial position this week along the following lines:

1. I think he has an above average chance to beat the market in the recovery, even re-basing right now. I do not think he was sitting around idly philosophizing about whether or not to double down on Hilton, for example. I suspect his analysis/information here is much better than mine is likely to be, and I'm more than happy to delegate the timing and distribution of the "hospitality recovery?" chunk of my portfolio to him. Eh, let's not mince words--I think he'll have a clearer understanding of where the best bailout rents are faster than I will.

2. As I've mentioned, this gap will only be maintained if his actual NAV tanks from here--there's just going to be too strong of a "trade of the decade" narrative for him to not become a very popular/reviled figure in all of this. Even the left will help--I've seen a few tweet takes characterizing his trade as "profiting off of our misery" etc and calling for investigations. If Elizabeth Warren and Bernie Sanders want to make him a symbol for Wall Street Greed and Evil Short Sellers, etc. I think that is a NAV discount narrower in and of itself. All press is good press, in this situation.

So, even if his outcome distribution was exactly the same as the S&P, #2 would make the payoffs attractive. I think this is sort of a no brainer if you're a coward like me that wants to stay 50% cash at this point. I'm not sure this makes sense if the other 90% of your portfolio is AER; just go all in there.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: matts on April 07, 2020, 05:32:13 AM
Pershing Square Holdings, Ltd. Issues 2019 Annual Report and Financial Statements, Announces Annual General Meeting in Guernsey and Additional $100,000,000 Share Buyback Program

https://www.businesswire.com/news/home/20200406005852/en/
Title: Re: NL:PSH - Pershing Square Holdings
Post by: mcliu on April 07, 2020, 08:29:40 PM
Has there been any reports on who the counterparty is to his CDS trade?
Title: Re: NL:PSH - Pershing Square Holdings
Post by: matts on April 08, 2020, 12:08:34 AM
I haven't seen anything. But normally something like this would be done with more than one counterparty. Ackman is the paranoid type so it's even more likely he spread the counterparty risk. Any counterparty would be absolutely crazy not to hedge off an exposure like this, so I doubt you will see headlines of a desk losing 2.6bn in a single trade.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on April 17, 2020, 07:19:28 AM
have lots on this up 40% but am buying more to the point where this is now my parents 2nd biggest position (at a wild and crazy 4.5% of their retirement nut!), average cost of about $17 or 44% discount to last NAV.

this remains at a 33% discount to most recent NAV of $30 and the market is slightly up since then.

if we assume 15% as the "right" discount (one could argue for 0% or 25%), then you've got a little cushion. Hedge the beta if you feel like.

Billy's back baby!

he's above his high watermark*, his employees are going to get paid when not a lot of funds are doing well, talent retention/attraction is going to be great (permanent capital high fee paying, you don't have to deal with running a short book, what could be a more attractive place to work if you're a ballin analyst)**

little token divvy, maximum buyback every day helps offset the management fee.

portfolio is a nice mix of stalwarts (Berkshire) and recovery juice (restaurants/hotels/HHC).

#teamackman


*a negative in terms of the fees paid going forward
**well I guess you do have to work for Bill Ackman
Title: Re: NL:PSH - Pershing Square Holdings
Post by: BG2008 on April 17, 2020, 07:51:48 AM
have lots on this up 40% but am buying more to the point where this is now my parents 2nd biggest position (at a wild and crazy 4.5% of their retirement nut!), average cost of about $17 or 44% discount to last NAV.

this remains at a 33% discount to most recent NAV of $30 and the market is slightly up since then.

if we assume 15% as the "right" discount (one could argue for 0% or 25%), then you've got a little cushion. Hedge the beta if you feel like.

Billy's back baby!

he's above his high watermark*, his employees are going to get paid when not a lot of funds are doing well, talent retention/attraction is going to be great (permanent capital high fee paying, you don't have to deal with running a short book, what could be a more attractive place to work if you're a ballin analyst)**

little token divvy, maximum buyback every day helps offset the management fee.

portfolio is a nice mix of stalwarts (Berkshire) and recovery juice (restaurants/hotels/HHC).

#teamackman


*a negative in terms of the fees paid going forward
**well I guess you do have to work for Bill Ackman

**haha, I guess you do have to work for Bill Ackman - What a quote

Bill Ackman has the potential to be meme'fied
Crying about "Hell is coming"  That maybe a job for my little cousin
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thowed on April 17, 2020, 03:53:44 PM
Lest we forget...

https://www.businessinsider.com/bill-ackman-email-to-charlie-munger-2016-5?r=US&IR=T

Still can't decide about this - I take all thePupil's points, but I still don't think it would sit comfortably with me, having him as a manager.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gregmal on April 17, 2020, 04:00:06 PM
Eh, Ackman can be a clown, but the email to Munger is just an example of the guy really giving a shit and doing whatever is possibly in his power to make his investments work; something I think is admirable. The downside, which we've seen with many, probably most notably, Herbalife, is he goes too far and doesnt know when to stop. But Ackman is definitely a guy who works his ass off for his investors and puts everything he has into making things work for them.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: LC on April 17, 2020, 05:28:58 PM
I'm pretty sure anyone who read that email has read more of that email than CM  ;D ;D ;D
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on May 19, 2020, 08:16:47 AM
Last reported NAV was $31.30 as of May 12th.

We have some idea of what is portfolio looks like as of 3/31
https://whalewisdom.com/filer/pershing-square-capital-management-l-p#tabholdings_tab_link

There are 10 stocks listed on the 13-F and as of April 30th PSH owned 10 stocks and had no shorts.
https://pershingsquareholdings.com/wp-content/uploads/2020/05/Performance-Report-April-2020-PSH.pdf

The sector descriptions in April also match with the stocks.

Excepting HHC, the bulk of PSH's portfolio is up since the last reported NAV, most notably CMG is up 13%, and the rest of the core is up 0-5%.

One of my least favorite parts of PSH is the Fannie Freddie trade, not because I agree or disagree with it but rather because it tempts me to read that goddamn thread.

The fannie's are also bouncing a little.

All this to say that I think NAV is continuing to go up and the discount remains 30%+. I have zero opinion on Fannie/Freddie, but if Billy outperforms in 2019, then executes the great and glorious hedge of March 2020, then monetizes it at the right time, then Fannie Freddie works, what is that going to look like in terms of his brand?

In other news, the restaurant stocks look stupid expensive. I don't understand CMG/SBUX/QSR at these levels, and they are a large portion of the book. there's an arb in there somewhere, (long PSH ADR in IRA / risk reversals on the restaurants stocks in the taxable?) but I'm just holding the fund and wearing the beta for now.

Owning the ~13% of the 13-F in Berkshire at a 30% discount is extremely appealing, which is more than offset by the 38% in QSR, CMG, and SBUX. in total, one must be more bearish of NAV growth now than a couple months ago.

#inBillwetrust
#teamAckman






Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gregmal on May 19, 2020, 08:23:51 AM
That short the market, call the bottom, and load the boat trade in March may go down as one of the greatest trades ever. Ackman is an ass, but I enjoy rooting for him. One of the few guys out there who seems to learn from his mistakes.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: aryadhana on May 19, 2020, 12:17:02 PM
The discount would probably vanish if the Board announced that the IMA with PSC would be terminated and money returned to shareholders after Ackman is gone... The holdco has a key man clause that expires in 2021, before which if Ackman left any renewal of the IMA would require majority consent from public shareholders.  After 2021 it sounds like it's pretty much up to the Board.  At this point it should be pretty clear that the level of the discount has less to do with expectations of Ackman's performance as much as the fact that there's no indication that shareholders will ever get their money back (except by selling to other bagholders shareholders at a discount) and the holding company is controlled by people with no economic interest in the matter. 

There really is no justification for failing to buy back as much of the company as public shareholders would sell for less than 85-90% of face value through a series of large tenders.  If the holding company committed to buying back as much stock as was available at more than a 10-15% discount every year -- heck, even every decade -- the stock would pretty quickly trade up to 92-98% of NAV and the company would end up needing to buyback little.  I wish we could award Ann Farlowe (or whoever is actually in charge of this thing) a 1-year warrant to buy 5% of the company at a 10% discount to NAV with option for a cash-free exercise.  Should be sufficiently motivating for someone whose guiding interest otherwise is maximizing the longevity of director income.

My guess is that the discount gradually trades back to 25%.  It's high right now because the company releases Tuesday's NAV after Wednesday's close and the volatility that makes this delay expensive should eventually relent. 
 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: buffetteer1984 on May 19, 2020, 01:20:18 PM
Pershing is likely hoping for re-rating based on performance value instead of having to spend the liquidity on buybacks and having it available for any potential market weakness to deploy into existing investments.  They've already bought back plenty and the markets still refuse to give them credit.  Pershing is batting above 800. avg over their life since 2004 on investments so i'm surprised the markets are still discounting their mistakes in valeant and herbalife (though the thesis was correct) to this extent.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: aryadhana on May 19, 2020, 03:42:04 PM
Pershing is likely hoping for re-rating based on performance value instead of having to spend the liquidity on buybacks and having it available for any potential market weakness to deploy into existing investments.  They've already bought back plenty and the markets still refuse to give them credit.  Pershing is batting above 800. avg over their life since 2004 on investments so i'm surprised the markets are still discounting their mistakes in valeant and herbalife (though the thesis was correct) to this extent.

It's not discounted because people expect Ackman to perform poorly (or at least not predominantly so); was also trading at a discount through the first half of last year when Ackman did well.  The discount is there because there is no prospect yet of the company ever returning money to shareholders despite the fact that failing to do so is destroying a lot of value.  Rarely is it so mathematically obvious that a company both can and ought to return money (either through dividends or buybacks so long as it is understood these will continue at an unusual pace until such time price approaches book value -- the discount would close under either strategy; the latter would just be relatively more accretive to continuing investors).  And the people who can influence the course of this discussion have absolutely no interest in the outcome.  It's also self-perpetuating at this point.  Hard to have faith in directors that refuse to buy a $1 for 66¢.  At some point there really is a floor, but I don't know what that is. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: iceinvan on May 19, 2020, 04:34:09 PM
Two potential justifications for Pershing not buying back more stock:

1) Buybacks increase leverage (assets down, equity down, debt unchanged). NAV per share will go up, but the higher leverage may actually end up widening the discount.

2) Investing a dollar to create two dollars increases NAV per share more than using that same dollar to buyback stock at a 30% discount. And it is reduces leverage.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Drokos on May 19, 2020, 06:58:49 PM
I don't see why there is any buyback criticism. They have repurchased ~20% of the shares outstanding over the last three years.

If they wanted to close the gap they could obviously do a $100-500MM tender at 10-15% discount to NAV, but they certainly couldn't get it filled at the current 35% discount. I'd much prefer they continue slowly repurchasing everyday and keep accumulating at a 35% discount rather than trying to rush it and pay higher prices to get it done quick. I couldn't be happier with their capital allocation as a long-term shareholder.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: mcliu on May 19, 2020, 06:59:10 PM
Keep in mind, there's 1.5% fees and 16% (?) carry. It's not like BRK where you have permanent capital ran for essentially free.
Unless you're expecting a liquidation or exceptional out-performance, it probably won't trade at FMV holding a basket of liquid publicly-traded securities.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: aryadhana on May 19, 2020, 07:03:43 PM
Two potential justifications for Pershing not buying back more stock:

1) Buybacks increase leverage (assets down, equity down, debt unchanged). NAV per share will go up, but the higher leverage may actually end up widening the discount.

2) Investing a dollar to create two dollars increases NAV per share more than using that same dollar to buyback stock at a 30% discount. And it is reduces leverage.

They can sell their 10% of their invested portfolio to buy back 15% of the same in the form of public shares, so the argument holds even keeping leverage constant.  There is no "investing a dollar to create two dollars" here.  What they own in SBUX may be undervalued, but even if it is the same thing at a big discount is even cheaper still.  They should indeed probably prepay (or set aside in relatively safe fixed income reserves to pay back) outstanding debt as they buyback shares.  Last year's debt issuance was a bad idea as well. 

They could just end the fund and unlock billions in captive shareholder value.  Given that the value is measured mark-to-market the threshold for not doing so has to be enormous, but then the company isn't controlled by interested parties. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: aryadhana on May 19, 2020, 07:15:29 PM
Keep in mind, there's 1.5% fees and 16% (?) carry. It's not like BRK where you have permanent capital ran for essentially free.
Unless you're expecting a liquidation or exceptional out-performance, it probably won't trade at FMV holding a basket of liquid publicly-traded securities.
That doesn't explain the extent of the discount (what's the FMV of 16% of the company's position in call options struck at-the-money?). 

Quote
I don't see why there is any buyback criticism. They have repurchased ~20% of the shares outstanding over the last three years.

If they wanted to close the gap they could obviously do a $100-500MM tender at 10-15% discount to NAV, but they certainly couldn't get it filled at the current 35% discount. I'd much prefer they continue slowly repurchasing everyday and keep accumulating at a 35% discount rather than trying to rush it and pay higher prices to get it done quick. I couldn't be happier with their capital allocation as a long-term shareholder.

Pace of repurchases hasn't been enough, or at least the logic isn't properly communicated.  If they had a standing offer to repurchase up to a 25% discount -- narrowing to a 10% discount a decade from now -- shares would probably trade up a lot even if there wasn't much use of the repurchase mandate.  The strategy you outline is fine in the same sense that "I hope management blunders in a methodical way so that it can buyout confused investors for a discount" is a good idea.  If people had faith in the current strategy, shares wouldn't be trading for such an enormous discount to what the extremely liquid underlying is worth. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on June 03, 2020, 07:55:16 AM
good time to trim in my view.

NAV growth rather than re-rating has driven returns of 20-78% from purchase prices and I'd argue the NAV is getting riskier with increased concentration in QSR and the abandonment of Berkshire and a substantial move in Fannie / Freddie and the market up a lot in general. (though at the very lows this was available for like 60% of NAV so there's been some accretion from a very low base)

have trimmed 1/4 of  maximum # of shares; if you trust Ackman fully, the thesis is absolutely intact and NAV multiple is still in the 70% range.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: buffetteer1984 on June 03, 2020, 08:28:45 AM
Might get listing on the ftse100 so could be a catalyst to closing the discount to nav
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Cevian on June 03, 2020, 08:48:35 AM
Keep in mind, there's 1.5% fees and 16% (?) carry. It's not like BRK where you have permanent capital ran for essentially free.
Unless you're expecting a liquidation or exceptional out-performance, it probably won't trade at FMV holding a basket of liquid publicly-traded securities.

Yup, all the Buffett wannabes pretend to emulate everything except Buffett's 100k salary. I'm done with the "finding the next Warren Buffett" industry. I admit I got burned by "Big Liar" and it's not happening again. As in every sport, there is always one "great one" and in this industry there will never be another Buffett. Lots of pretenders though, but never on fees.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: fareastwarriors on June 23, 2020, 01:32:53 PM

Bill Ackman’s new blank check company may be a $4 billion bet on a so-called Mature Unicorn

https://www.cnbc.com/2020/06/22/bill-ackmans-new-blank-check-company-will-be-a-4-billion-bet-on-a-so-called-mature-unicorn.html (https://www.cnbc.com/2020/06/22/bill-ackmans-new-blank-check-company-will-be-a-4-billion-bet-on-a-so-called-mature-unicorn.html)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: aryadhana on June 23, 2020, 03:14:32 PM
Size of PSH's commitment to the SPAC, including whatever he needs to reserve for possible exercise of the warrants, decreases the likelihood of a large buyback.  Altogether, the YTD outperformance probably also dampens any pressure to close the discount by returning money to investors.  Which is a disappointment -- investors would have been better off had he closed the fund in January even considering his excellent performance thereafter.  Put another way, shares are trading today what they were worth last March and he's performed exceptionally since then... except against the benchmark of doing nothing and returning money.

Astonishing disregard.  And what's worse is that I'm pretty sure he has no direct fiduciary duty to PSH shareholders, which is rather endowed to a Board controlled by a charity without any economic interest in much other than the longevity of the annual retainer.  (He presumably does have a duty to the PSH funds he manages, which admittedly have done quite well)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on June 23, 2020, 03:22:31 PM
The dude has been buying back a nice amount, over $700mm in 3 years or so. Buys the most every day.

Why would we expect someone to completely liquidate their life’s work? Full liquidation is completely unrealistic particularly in the context of his recent performance; there’s strong argument the vehicle should exist.

You can either look at the fat discount as an opportunity or as evidence they aren’t doing enough. I choose the former.




Pershing Square Holdings, Ltd. Announces Additional Share Buyback Program of $100,000,000

PSH has Repurchased a Total of $762 Million of PSH Public Shares Since the Launch of its First Share Repurchase Program on 2 May 2017

Business Wire

LONDON -- June 23, 2020

Regulatory News:

Pershing Square Holdings, Ltd. (LN:PSH) (LN:PSHD) (NA:PSH) today announced an additional share buyback program (the “Program”) for $100,000,000 of PSH’s outstanding Public Shares on the London Stock Exchange and Euronext Amsterdam. The Program will commence following the completion of the previously announced $100,000,000 share buyback program. The Program is accretive to NAV per share and will reduce PSH’s capital.

As of 22 June 2020, PSH had completed 84.5% of the previously announced $100,000,000 share buyback program. PSH commenced that program on 16 April 2020 and has repurchased a total of 3,853,545 PSH Public Shares at an average price of $21.94.

Since PSH commenced its first share buyback program on 2 May 2017, PSH has repurchased a total of $762 million of PSH Public Shares, representing 47,816,431 PSH Public Shares at an average price of $15.93.

Jefferies International Limited will continue in its role as sole buyback agent for the Program which will enable the purchase of shares during closed periods. Shares repurchased by the Company will be held in Treasury.

In accordance with EU regulations, PSH advises shareholders that the number of shares to be repurchased under the Program is the maximum of $100,000,000 or 6,000,000 PSH Public Shares.

About Pershing Square Holdings, Ltd.
Pershing Square Holdings, Ltd. (LN:PSH) (LN:PSHD) (NA:PSH) is an investment holding company structured as a closed-ended fund that makes concentrated investments principally in North American companies.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: aryadhana on June 23, 2020, 03:58:52 PM
I think a lot of what you're saying would be fine if the holding company was structured in a way that let shareholders have any say.  Giving shareholders a way to realize the value of assets they own wouldn't necessarily nullify his life's work -- he could reorganize into a normal hedge fund, which is more than capable of owning shares in Chipotle.  He could also simply explain the circumstances under which capital would be returned.  As I said, if he promised to buy back a $1 today, $2 tomorrow, and double that every day forward until the discount was less than 10-15%, it would likely close without the fund actually having to buyback all that much at all. 

He finds himself in the position that shares would rally by almost 50% if he were to unexpectedly retire...  It's an opportunity when a conglomerate or operating company temporarily trades at a 30% discount.  Not so much for an investment company holding extremely liquid securities marked-to-market.  What is the likelihood he outperforms a liquidation that results in a 45-50% gains realized immediately reinvested in the market?

I probably sound more bitter than I am.  I think it's an objectively regrettable situation for a number of reasons (as I said, none of this would offend me if investors had any control), but I also realize the merits and broadly like the guy.  If anything my problem is not with him, but the Board...  he has held up his share of the bargain (if you one-off 2016) and NAV has done well. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: aryadhana on June 23, 2020, 04:09:47 PM
I sort of think he might prefer shares continue to trade at a discount so he can continue accretive repurchases indefinitely which may be in the interest of long-term shareholders.  I think that altogether isn't very nice, but not wholly inconsistent with the premise of: "trust me - I'm going to invest your money indefinitely and give it back to you when I'm done.  You're on your own if you want to sell before that."  (The IMA is such that a key man event, like his retirement, would cause the fund to terminate until 2021 - but I'm not sure what happens once that clause expires.  I think shares would react positively to an announcement that investors will have the opportunity to tender shares for book value once he retires). 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Xerxes on June 23, 2020, 07:01:12 PM
What is the logic for the new investment vehicle ?

why not issues share of Pershing Square to get more 'permanent capital' to do whatever he wants to do or sale an asset.
I understanding that it has been buying back shares, so issuing share would just reverse that, but still is there a more specific reason to create a mini-Softbank vision fund


Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gamecock-YT on June 23, 2020, 07:49:29 PM
What is the logic for the new investment vehicle ?



he can make a boat load of money, I'm guessing
Title: Re: NL:PSH - Pershing Square Holdings
Post by: aryadhana on June 23, 2020, 08:21:40 PM
What is the logic for the new investment vehicle ?

why not issues share of Pershing Square to get more 'permanent capital' to do whatever he wants to do or sale an asset.
I understanding that it has been buying back shares, so issuing share would just reverse that, but still is there a more specific reason to create a mini-Softbank vision fund

I think the Articles of Incorporation (and possibly LSE listing rules for funds) disallow the issuing of shares at a discount (or at something more than a nominal discount) without a shareholder vote.  The PSH structure is also not fit for an operating company, which Tontine holdings would presumably become. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thowed on June 26, 2020, 12:17:48 PM
I haven't seen anything about the fact that PSH as of 31 May has CDS exposure again.

It'll be interesting to see if he pulls it off again, or if he was just lucky last time.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: rb on June 26, 2020, 12:28:57 PM
I think he just got lucky then with the liquidity drying up back in March. I don't think you get lucky again with the fed pointing a firehose of liquidity at the markets.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: buffetteer1984 on June 26, 2020, 01:38:24 PM
Where did you see this?  According to the performance report for may as of may 31, 2020 pershing's exposure to total CDS is $0.  His nav has been dropping with the latest market decline

I haven't seen anything about the fact that PSH as of 31 May has CDS exposure again.

It'll be interesting to see if he pulls it off again, or if he was just lucky last time.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: TwoCitiesCapital on June 26, 2020, 01:42:19 PM
I think he just got lucky then with the liquidity drying up back in March. I don't think you get lucky again with the fed pointing a firehose of liquidity at the markets.

Well, he definitely paid more for the exposure this time which will certainly limit the % gain, but I think he'll probably do alright the second time around. We're only just beginning to see the economic impact with bankruptcies like Hertz coming through. Credit spreads probably have another spike or two in them as we work through that which will help.

Also, he doesn't need to be 100% hedged this time around. He's already got like a 30+% advantage to the S&P 500 this year. Just hedge enough to ensure that's locked in and let the rest of the portfolio fluctuate.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gregmal on June 26, 2020, 02:40:06 PM
He also went bonkers with HHC, something that at least if last time is a precursor, would get annihilated. While I think there is pain in the RE and names that previously got whacked if the economic recovery takes a step back, I am also wondering if this is where some of the clouds circling the more popular stuff start tempering investor enthusiasm for them. Every pop stock but maybe NFLX and MSFT currently have big clouds hanging over them, especially politically.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thowed on June 26, 2020, 03:36:54 PM
Where did you see this?

It's tucked away in the Transparency Reports.  Listed as 'Long Protection'.  I think it's Indices CDS, so it's confusing as the 0 figure on the Performance Report is for individual and Sovereign CDS.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: buffetteer1984 on June 27, 2020, 08:17:06 AM
Oh man I don't know how I ever missed the transparency reports before.  Thanks!

Where did you see this?

It's tucked away in the Transparency Reports.  Listed as 'Long Protection'.  I think it's Indices CDS, so it's confusing as the 0 figure on the Performance Report is for individual and Sovereign CDS.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on July 14, 2020, 06:41:12 AM
https://www.renaissancecapital.com/IPO-Center/News/69470/The-biggest-SPAC-ever-just-got-bigger-Pershing-Square-Tontine-Holdings-ups-
https://seekingalpha.com/article/4358226-pershing-square-tontine-holdings-spac-worth-watching
https://www.sec.gov/Archives/edgar/data/1811882/000119312520175042/d930055ds1.htm

I view this SPAC development as favorable for PSH NA. The SPAC is clearly highly sought after given there's a bit of SPAC-mania going on in the markets and they upsized the offering.

Pershing Square has created a highly sought after IPO and we know that PSH NA will have a very material $1-$3B of guaranteed allocation to that IPO. As the largest SPAC and one of the largest possible equity checks out there, this actually does seem to be a unique source of capital for a company and I think it's possible they are able to secure a good deal. It creates a lot of low risk optionality for PSH.

The creation of this vehicle will likely increase reported NAV and intrinsic value over the short and intermediate term.

What's even better is you can buy this SPAC (alongside the rest of the portfolio) for 70 cents on the dollar.

It's funny that the world is so eager to give Bill Ackman and crew a $4B blank check, but won't invest in his fund that holds that blank check at 70 cents on the dollar.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: BG2008 on July 14, 2020, 06:50:59 AM
The whole SPAC Mania is insane at the moment.  Draft King, Virgin Galactic, really any tech, software, spaceship, story that sounds kind of cool is getting a 40-50% pop upon merger news.  Then you have this crummy plastic packaging company that throws off likely close to $1bn of FCF next year and it trades for 6x that today.  This crummy plastic packaging company can also get debt financing at 1-3% today. 

The investing wisdom today is literally "a bird in the bush in 2025 is worth more than 2 birds in your hand today"
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on July 14, 2020, 07:18:21 AM
by the way, they are obviously a ratings agency and so are coming from that perspective, but Fitch covers all that's going on with PSH pretty thoroughly in a few short paragraphs. hihglighted what I think is most relevant in bold.

Quote
After meaningfully underperforming benchmark indices during the 2015-2017 period, management implemented several process changes that included stricter adherence to its core investment principles and substantially reducing the time Ackman allocated to capital raising activities for PSCM's open-ended funds and media relations. PSH's performance has rebounded sharply over the past three years, outperforming (net of fees) the SP 500 index in 2018 (+3.7%), 2019 (+26.6%), and 1H20 (+32%). Importantly, the strong performance in 2019 was broad-based, with all of its investments contributing positive performance.

As of May 31, 2020, PSH's assets under management (AUM) stood at $8.6 billion and PSCM's total strategy AUM stood at $10.3 billion, up 41% and 25%, respectively, from a year ago. Although still down from the peak levels of over $19 billion in 2015, Fitch believes the increase in AUM is constructive toward PSCM being able to effectively execute its activist strategy with larger capitalization companies while maintaining sufficient portfolio diversification.

As the effects of the coronavirus pandemic were becoming more apparent in February 2020, PSCM grew increasingly concerned that the spread of the virus could result in significant economic damage to the global economy, which would have severe negative implications on the performance of its portfolio. Consequently, PSCM began purchasing credit default swap (CDS) protection on U.S. and European investment grade and U.S. high yield bond indices in February and March, whose notional amount was significantly larger than PSCM's AUM at the end of January. Management chose CDS to hedge the portfolio as it believed it provided asymmetric risk in the sense that spreads on investment grade and high yield bonds were trading at historically tight spreads while its downside was limited to the cost of carry (premiums). Management expected credit spreads to widen considerably once the impact of the coronavirus on the global economy became more apparent.

The hedge was highly effective in offsetting unrealized losses on PSH's equity portfolio, as credit spreads widened considerably and the value of the CDS increased sharply. PSCM decided to unwind its entire CDS position in mid March after the position had increased to 40% of NAV as a result of market value appreciation in the CDS combined with declines in its equity positions, and management became more comfortable with government actions aimed at containing the virus. PSCM generated a gain of $2.6 billion ($2.1 billion for PSH) on the CDS positions versus premiums and commission paid of $27 million, which more than offset the unrealized losses on its equity portfolio. PSH's returns in March were 11.1% compared to a 12.4% loss for the SP 500 index.



While Fitch believes the actions taken by PSCM to manage the macroeconomic risks stemming from the coronavirus were effective and critical to PSH's outperformance in the first half of this year, the trades could have resulted in material losses in the event that CDS spreads tightened further, particularly given the notional size relative to PSH's long equity portfolio. Since the gains from the CDS were larger than the losses on the positions it aimed to hedge, despite the bond indices having lower implied volatility, it suggests the position was outsized in relation to the risk being hedged. In this regard, Fitch would view the establishment of formal risk management policies, including risk limits, favorably. If management were to make outsized speculative investments in derivative products (including CDS) a core and continuous part of its investment strategy, Fitch would view it unfavorably and it could result in negative rating actions.

On June 22, 2020, Pershing Square Tontine Holdings, Ltd. (PSTH), a newly formed SPAC, filed an S-1 with the SEC, with plans to issue shares via an IPO in coming weeks. PSTH is being sponsored by an affiliate of PSCM that is owned by PSCM's three fund vehicles including PSH, and has appointed Ackman as chairman and CEO. The filing aims to raise $4 billion from third party investors and has an additional $1 billion commitment from PSCM's funds, including PSH, through a forward purchase agreement. PSCM's funds also have the option to acquire an additional $2 billion in stock units at the IPO price. The $3 billion of aggregate commitments from PSCM's funds, which will also include one-third of a warrant per stock unit purchased, must be completed no later than the time of closing of a business combination (acquisition) by the SPAC vehicle.

The SPAC could raise up to $7 billion in aggregate and will seek to acquire a minority interest in a large private company that is consistent with PSCM's core investment principles. Fitch views PSCM's ability to raise substantial capital through external vehicles as constructive to its activist strategy since PSH's significant discount to NAV prevents it from raising equity capital to support new investments. PSCM's ability to raise $4 billion from third-party investors, in what would be the largest IPO of a SPAC to date if completed, is also indicative of PSH's franchise strength, and reduces to some degree Fitch's prior concerns of reputational damage caused by PSCM's underperformance from 2015-2017. However, Fitch would view an outsized investment by PSH in PSTH such that it represented more than 20% of PSH's portfolio unfavorably.

The discount to NAV on PSH shares has widened further despite PSH's strong outperformance over the past two years; expanding to 32% at June 30, 2020. The discount to NAV is relevant to debtholders to the extent management takes additional shareholder friendly actions, such as share repurchases, in order to seek to reduce the discount. To this end, PSH has announced five separate $100 million share repurchase programs since June 2019. Fitch views share repurchases and other shareholder-oriented actions, such as the establishment of a dividend, as detrimental to PSH's credit risk profile, while reducing the cushion available to absorb declines in the value of underlying investments that could drive PSH's debt-to-equity ratio above Fitch's 0.35x leverage tolerance.

On July 25, 2019, PSH issued $400 million of senior unsecured bonds that mature in July 2039 and carry a 4.95% coupon to accounts managed by Guggenheim Partners Investment Management, LLC. The 20-year bonds are subject to substantially the same terms as PSH's existing $1 billion unsecured notes due July 15, 2022, with the exception of the key person provision. After July 15, 2022 (the maturity date of PSH's existing bonds), the death, permanent disability, or withdrawal of Ackman as managing member of the general partner would not constitute a change in control that would enable bondholders to put the bonds to PSH at a price of 101% plus accrued and unpaid interest within 120 days of the occurrence. Rather, if a key person event were to occur after July 15, 2022, PSH's maximum leverage ratio covenant, defined as debt-to-total capital, would decline to 25% from 33%. Thereafter, the maximum leverage ratio covenant would be an incurrence-based test only, not a maintenance covenant. Fitch believes this is notably weaker than the existing key person provision.

PSH's leverage of 0.20x as of May 31, 2020, was a tick above 0.19x at May 31, 2019, but down from 0.25x following its July 2019 debt issuance. PSH's leverage is in the middle of its historical range of between 0.14x and 0.27x since it first issued debt in June 2015. However, PSH's leverage remains above the 0.15x at rating inception in June 2015, and Fitch believes PSH's leverage could be volatile given its highly concentrated portfolio, the equity market backdrop and management's periodic capital returns to shareholders. PSH's unencumbered cash represented 18.9% of NAV at May 31, 2020, or roughly $1.37 billion, although Fitch expects a large portion of the cash to be redeployed into investments over the next 12 months.

Strong investment outperformance has driven the decline in PSH's leverage since its July 2019 debt issuance. Based on leverage at May 31, 2020, Fitch calculates that PSH could withstand an additional market value decline of 35.4% of gross assets (37.5% including a reversal of accrued performance fees) before exceeding Fitch's quantitative downgrade trigger of 0.35x. While sustained market declines of this magnitude are rare, they are certainly possible when considered against the backdrop of substantial economic uncertainty stemming from the coronavirus pandemic.

PSH's closed-end structure allows it to avoid forced selling to meet redemptions and is viewed as a credit strength relative to open-end fund structures, all else equal. However, market declines and material redemptions at PSH's open-end sister funds have reduced the overall amount of investment capital PSCM has available to exert economic influence on portfolio companies. As of May 31, 2020, PSH's AUM represented 84% of PSCM's strategy AUM, compared to roughly 40% at the end of 2015.

PSH's investment strategy is heavily-influenced by Ackman, which suggests that key person risk is elevated. Positively, through July 15, 2022 (or the time at which PSH's 2022 notes are redeemed), senior unsecured debt holders have the right to put the debt to PSH for redemption at a price of 101% plus accrued and unpaid interest within 120 days of the occurrence of Ackman's death, permanent disability or withdrawal as managing member of the general partner to the investment manager. Fitch views this feature as a mitigant to key person risk, given the likely uncertainty that would surround PSH's future strategic direction upon such an event, and thus the removal of this covenant following the maturity or redemption of the 2022 bonds is viewed as a rating constraint.

PSH maintains a liquid portfolio, with 104% of its net assets comprised of cash and Level 1 assets at May 31, 2020. Individual investment holdings typically represent minority ownership percentages but may exceed 10% of portfolio companies' outstanding securities. Minority investments reduce the potential adverse market impact of rapid selling, relative to majority investments, but nevertheless, rapidly selling large minority blocks is likely to result in valuation discounts.

PSH does not maintain a defined liquidity policy, such as minimum cash and committed liquidity facilities relative to interest expenses and near-term debt maturities. When combined with the expectation of variable levels of balance sheet cash and dividend income from portfolio companies, this may require PSH to periodically liquidate modest portions of investments to service debt obligations and/or pay dividends. This could moderately erode capitalization levels and potentially reduce the ability to exert influence on portfolio companies. Fitch calculates that PSH's upstream dividend and interest income coverage of interest expenses was 1.06x for the TTM ending May 31, 2020, down from 1.58x as of May 31, 2019. Interest coverage is viewed as weak for the rating, but is mitigated by strong asset liquidity.

Given the high degree of economic uncertainty stemming from the coronavirus pandemic combined with the recent sale of its position in Berkshire Hathaway Inc., PSH was holding a significant amount of excess cash. At May 31, 2020 PSH's unrestricted cash was $1.4 billion, or 18.9% of gross asset value compared to $186.8 million or 3.2% of gross asset value at Dec. 31, 2019. The liquidity of PSH's investment portfolio remained high with investments that could be liquidated in less than one month, assuming capture of 20% of the trailing 90-day trading volume, at 81.1% of the total investment portfolio (including derivative positions) at Dec. 31, 2019, which was relatively flat with 80.9% at Dec. 31, 2018.

The Stable Outlook reflects Fitch's view that PSH's leverage and liquidity positions are appropriate relative to the fund structure, portfolio composition, current market backdrop and assigned ratings.

The equalization of the senior unsecured debt rating with PSH's IDR reflects the lack of senior secured debt, the availability of meaningful unencumbered asset coverage, and average recovery prospects under a stress scenario.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Foreign Tuffett on July 14, 2020, 07:40:05 AM
So I guess everyone thinks Ackman is smart again now? It was only a few years ago when basically everyone on this board (and on Twitter too) thought he was an investing dunce.

Maybe the dunce Ackman was replaced by a doppelganger genetically engineered to be a superior investor? My own personal theory is that Ackman is a guy who bets big, and is right sometimes and wrong sometimes. That can't possibly be it though....the doppelganger theory is probably correct.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: 5xEBITDA on July 14, 2020, 07:48:40 AM
With the amount of equity capital raised I think he is definitely going to be providing a large, PE owned portfolio company with an exit. $4-7 billion on his SPAC alone, plus another $1-2 billion in a PIPE, plus another $4-5 billion from a co-invest partner to keep PSH's commitment a "minority", plus $10 billion or more in debt capacity given the equity cushion range means he can give serious bids to $15 - $25 billion+ enterprise value companies.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on July 14, 2020, 09:12:28 AM
So I guess everyone thinks Ackman is smart again now?

So you think that PSH trading at .70 of NAV indicates that everyone thinks Ackman is smart again? Hmm, OK.  ::)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gregmal on July 14, 2020, 09:26:36 AM
I dont think anything has really changed. Or see how you cant argue that Ackman is quite an investor. Of the merry band of Harvard buddies, Ive always said, Tilson is the idiot, Einhorn is incredibly book smart but continually misses the forest for the trees, and that Ackman is something special.

Ackman's problem is overconfidence. His list of successful investments, not to mention pure home runs of the caliber most investments cant even dream of, is quite long. People are obviously entitle to their opinions, but acting like the guy is a moron because of a few bad investments its plainly stupid. He both succeeds and fails on a large stage, but given where he is and his overall performance numbers, not to mention coming back from a few horrible years, is impressive, if not admirable.

And yea, closed end funds or captive vehicles always trade at discounts to NAV. So Im not sure there is much to make of that with PSH.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Foreign Tuffett on July 14, 2020, 09:32:08 AM
So I guess everyone thinks Ackman is smart again now?

So you think that PSH trading at .70 of NAV indicates that everyone thinks Ackman is smart again? Hmm, OK.  ::)

Did I say anything about valuation? No.

My comment was more about the general tone of the comments I have seen recently vs the criticism that was omnipresent several years ago. Peeps appear to be overweighting the most recent developments instead of thinking more holistically about Ackman's entire career.

Agree with Greg that Ackman isn't a moron, but it's hard for me to be a fan of someone who has blown up two hedge funds. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on July 14, 2020, 10:24:19 AM
So I guess everyone thinks Ackman is smart again now?

So you think that PSH trading at .70 of NAV indicates that everyone thinks Ackman is smart again? Hmm, OK.  ::)

Did I say anything about valuation? No.

My comment was more about the general tone of the comments I have seen recently vs the criticism that was omnipresent several years ago. Peeps appear to be overweighting the most recent developments instead of thinking more holistically about Ackman's entire career.

Agree with Greg that Ackman isn't a moron, but it's hard for me to be a fan of someone who has blown up two hedge funds.

My point is that you are overclaiming that "everyone thinks Ackman is smart again". And the valuation shows that you are overclaiming. If everyone thought that Ackman is smart, PSH would not trade at 0.7 NAV.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on July 14, 2020, 10:38:59 AM
Peeps appear to be overweighting the most recent developments instead of thinking more holistically about Ackman's entire career.
Agree with Greg that Ackman isn't a moron, but it's hard for me to be a fan of someone who has blown up two hedge funds.

I count 3 blow ups: Gotham, Target SPV, and the 40% peak to trough drawdown 2014-2016.

Gotham was a $300mm fund that became overly concentrated in illiquid investments and shut down as it faces too many redwmption. I do not know the end results with respect to returns. I know that Gotham Golf was like 20% of the fund, that the fund was flat in 2002 and had generated 20%/year sine 1993. All from a WSJ article. I’m not sure of subsequent write downs or end results. I suspect that the overall record is “not bad” but there’s plenty of negative headlines about them being forced to shut down. If you have more data on this, I’d appreciate it.

EDIT: "What I'm most proud of is that all five of my investors that got into Gotham in 2002, and therefore lost money, decided to re-up in Pershing and have been made whole," he says.
https://www.wsj.com/articles/SB113356721431912937

Note this quote from Ackman. This implies that all investors who invested previously made money. Therefore it's not likely at all to me that Gotham impaired capital. Considering Pershing Square killed it from 2004-2014 and Gotham killed it 1993-???early 2000's?, it's likely that Ackman has made money (in many cases significant amounts) for the vast majority of his investors. Even those who piled into PSH @ $25 in 2014 have seen NAV grow from $25-->$34/5, though de-rating has sapped their returns. I therefore make a motion to reduce Ackman's number of blow-ups to 2: the Target SPV and the temporary 40% drawdown driven by Valeant

The Target SPV lost 90%+. I will avoid a concentrated investment in a single company levered vehicle preceding a financial crisis (maybe The SPAC investors clamoring for allocation should think about that lol)

The Valeant debacle is what it is and is included in PSH’s impressive 2004-2020 track record. PSH could certainly draw down by 40% again; I doubt it would be idiosyncratic (not accompanied by a big market sell off given the current portfolio and changes to investment process) but he could make mistakes.

I just don’t see why I should weight either the Gotham episode (where he now has permanent capital which entirely mitigates the risk of a redemption cycle) or the Target episode too much in my evaluation of him as an investor. Joe Steinberg invested in the Target vehicle and still maintains a relationship (he’s on SPAc’s board) so I guess Joe is a forgiving soul as well.

I understand rcency bias, but I just don’t see how the mistakes of the past should be weighted more than the wins. PSH actually appears to solve a couple of the issues that have proved problematic for billy.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: BG2008 on July 14, 2020, 10:42:34 AM
I would just say to pay attention to who Ackman is dating, divorcing, or marrying.  Seems like his bad returns was also during a period when he was divorcing his ex wife.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Spekulatius on July 14, 2020, 10:50:41 AM
So I guess everyone thinks Ackman is smart again now? It was only a few years ago when basically everyone on this board (and on Twitter too) thought he was an investing dunce.

Maybe the dunce Ackman was replaced by a doppelganger genetically engineered to be a superior investor? My own personal theory is that Ackman is a guy who bets big, and is right sometimes and wrong sometimes. That can't possibly be it though....the doppelganger theory is probably correct.

Ackmanns last special vehicle was a single levered bet on Target before the Great Recession. It was a zero if I recall correctly.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on July 14, 2020, 10:56:31 AM
Ackmanns last special vehicle was a single levered bet on Target before the Great Recession. It was a zero if I recall correctly.
that's correct. it realized a loss of over 90%. I believe that fatal error was use of options/margin lending.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Foreign Tuffett on July 14, 2020, 11:46:27 AM
thepupil -- Interesting response with plenty to chew on. Yeah, he has permanent capital now, but that doesn't eliminate the possibility of him making another big error. Ackman swings the bat really hard. When you do that sometimes you strike out and sometimes you hit a home run. I think Ackman's track record managing large sums of money is probably about what one would expect.

Spekulatius -- Good point, I had entirely forgotten about the Target debacle.

BG2008 --  Einhorn went through a (apparently protracted) divorce as well.

More generally, I think one underrated aspect that has contributed to Buffett's success is how stable his personal life has been (same house since 1958, with Susan for 25 years before she left for San Fran, no apparent health problems prior to the age of 80, etc)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on July 14, 2020, 12:30:01 PM
So I guess everyone thinks Ackman is smart again now? It was only a few years ago when basically everyone on this board (and on Twitter too) thought he was an investing dunce.

Maybe the dunce Ackman was replaced by a doppelganger genetically engineered to be a superior investor? My own personal theory is that Ackman is a guy who bets big, and is right sometimes and wrong sometimes. That can't possibly be it though....the doppelganger theory is probably correct.

Ackmanns last special vehicle was a single levered bet on Target before the Great Recession. It was a zero if I recall correctly.

Wasn't Ackman / Pershing Square one of the early backers of Martin Franklin's "Platform Acquisition Holdings," which became Platform Specialty Products and is now called Element Solutions?  Don't think that SPAC created a lot of value.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on July 14, 2020, 12:36:43 PM
yes, PAH went from $10-->$28-->$6-->$11. I can't find the great ackman slide presentation about compounders and Martin Franklin that came just before the fall.

he was also behind Justice and still owns 13% of QSR (burger king/popeyes)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gregmal on July 14, 2020, 12:38:14 PM
I heard he also had an investment that went down 10% once.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on July 14, 2020, 12:43:30 PM
yes, PAH went from $10-->$28-->$6-->$11. I can't find the great ackman slide presentation about compounders and Martin Franklin that came just before the fall.

he was also behind Justice and still owns 13% of QSR (burger king/popeyes)

Oh yeah - I forgot it was a SPAC called Justice before it bought Burger King.  I guess he's a SPAC expert by now
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on July 14, 2020, 12:47:17 PM
Bill SPACkman, blower upper of funds (except the 2 flagship ones that made money/outperformed for most investors since 1993)

I’m a SPAC MAN!!!
https://m.youtube.com/watch?v=JY0U1uq6BIQ
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gregmal on July 14, 2020, 12:50:46 PM
Pre deal SPAC(especially if you can get IPO, which Bill certainly can) are probably the most underrated cash alternatives an investor can buy.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: fareastwarriors on July 14, 2020, 12:52:03 PM
Martin Franklin is back again with another Billion $ spac.

What a SPAC-tacular time to raise money.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on July 14, 2020, 01:10:59 PM
I’m a SPAC MAN!!!
https://m.youtube.com/watch?v=JY0U1uq6BIQ

This guy SPACs!  8)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: gfp on July 14, 2020, 01:23:19 PM
Pre deal SPAC(especially if you can get IPO, which Bill certainly can) are probably the most underrated cash alternatives an investor can buy.

That is very true.  Lots of optionality - and literal options thrown in to boot.  Plus you get your cash back if they don't find a deal.  Sometimes I buy them below $10 - assuming 10 is offering price - afterwards, but they don't come with included warrants when you buy them after the fact
Title: Re: NL:PSH - Pershing Square Holdings
Post by: TwoCitiesCapital on July 14, 2020, 03:05:58 PM
Pre deal SPAC(especially if you can get IPO, which Bill certainly can) are probably the most underrated cash alternatives an investor can buy.

That is very true.  Lots of optionality - and literal options thrown in to boot.  Plus you get your cash back if they don't find a deal.  Sometimes I buy them below $10 - assuming 10 is offering price - afterwards, but they don't come with included warrants when you buy them after the fact

+1

Have only done it once, but I believe I made 6-7% holding a SPAC at below NAV waiting for a deal. Not a bad return on cash for the holding period.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thowed on July 14, 2020, 03:44:50 PM
the great ackman slide presentation about compounders and Martin Franklin that came just before the fall.

Is it this one?

Good point made about divorces.  This is the sort of hard-to-find scuttlebutt (if you're not in the right part of the industry) that can be invaluable, as it can shake up the performance of outstanding investors, especially the established Hedge guys.  See also: spending too much time on your a) art collection b) penthouse properties c) charity events etc. etc.

I would still love to believe in PSH at the current discount, but can't really see the appeal of a portfolio made so much of fast food chains and a hotel franchise chain.

The SPAC will be fascinating, but due to my cynicism makes me worry that he's got cocky again after March, and will blow it again.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: 5xEBITDA on July 14, 2020, 08:20:11 PM
Pre deal SPAC(especially if you can get IPO, which Bill certainly can) are probably the most underrated cash alternatives an investor can buy.

That is very true.  Lots of optionality - and literal options thrown in to boot.  Plus you get your cash back if they don't find a deal.  Sometimes I buy them below $10 - assuming 10 is offering price - afterwards, but they don't come with included warrants when you buy them after the fact

+1

Have only done it once, but I believe I made 6-7% holding a SPAC at below NAV waiting for a deal. Not a bad return on cash for the holding period.

It is worth monitoring to be opportunistic. In March, I was able to buy a large basket of various SPACs trading at 10-15%+ annualized yields to NAV and they've all repriced to 1-2% yields. It doesn't happen often, there was maybe a two week period to put the trade on.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: BG2008 on July 15, 2020, 04:32:43 PM
Pre deal SPAC(especially if you can get IPO, which Bill certainly can) are probably the most underrated cash alternatives an investor can buy.

That is very true.  Lots of optionality - and literal options thrown in to boot.  Plus you get your cash back if they don't find a deal.  Sometimes I buy them below $10 - assuming 10 is offering price - afterwards, but they don't come with included warrants when you buy them after the fact

+1

Have only done it once, but I believe I made 6-7% holding a SPAC at below NAV waiting for a deal. Not a bad return on cash for the holding period.

It is worth monitoring to be opportunistic. In March, I was able to buy a large basket of various SPACs trading at 10-15%+ annualized yields to NAV and they've all repriced to 1-2% yields. It doesn't happen often, there was maybe a two week period to put the trade on.

I thought about doing the same as it happened back in 2008/2009.  But the spreads were bigger back then.  Capital allocation towards new ideas have done much better thus far.  I made a conscious decision to diversify my positions and bought a basket of smaller companies that had 3-4x upside. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: TwoCitiesCapital on July 15, 2020, 04:43:02 PM
Pre deal SPAC(especially if you can get IPO, which Bill certainly can) are probably the most underrated cash alternatives an investor can buy.

That is very true.  Lots of optionality - and literal options thrown in to boot.  Plus you get your cash back if they don't find a deal.  Sometimes I buy them below $10 - assuming 10 is offering price - afterwards, but they don't come with included warrants when you buy them after the fact

+1

Have only done it once, but I believe I made 6-7% holding a SPAC at below NAV waiting for a deal. Not a bad return on cash for the holding period.

It is worth monitoring to be opportunistic. In March, I was able to buy a large basket of various SPACs trading at 10-15%+ annualized yields to NAV and they've all repriced to 1-2% yields. It doesn't happen often, there was maybe a two week period to put the trade on.

I thought about doing the same as it happened back in 2008/2009.  But the spreads were bigger back then.  Capital allocation towards new ideas have done much better thus far.  I made a conscious decision to diversify my positions and bought a basket of smaller companies that had 3-4x upside.

It's not being pitched as a replacement for long positioning. It's being pitched as a cash alternative.

If you want to go long something, go long something. If you want to hold money in CDs, money market, cash, shirt duration bonds, etc you can add SPACs under NAV to the list.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: 5xEBITDA on July 16, 2020, 05:57:58 AM
Pre deal SPAC(especially if you can get IPO, which Bill certainly can) are probably the most underrated cash alternatives an investor can buy.

That is very true.  Lots of optionality - and literal options thrown in to boot.  Plus you get your cash back if they don't find a deal.  Sometimes I buy them below $10 - assuming 10 is offering price - afterwards, but they don't come with included warrants when you buy them after the fact

+1

Have only done it once, but I believe I made 6-7% holding a SPAC at below NAV waiting for a deal. Not a bad return on cash for the holding period.

It is worth monitoring to be opportunistic. In March, I was able to buy a large basket of various SPACs trading at 10-15%+ annualized yields to NAV and they've all repriced to 1-2% yields. It doesn't happen often, there was maybe a two week period to put the trade on.

I thought about doing the same as it happened back in 2008/2009.  But the spreads were bigger back then.  Capital allocation towards new ideas have done much better thus far.  I made a conscious decision to diversify my positions and bought a basket of smaller companies that had 3-4x upside.

It's not being pitched as a replacement for long positioning. It's being pitched as a cash alternative.

If you want to go long something, go long something. If you want to hold money in CDs, money market, cash, shirt duration bonds, etc you can add SPACs under NAV to the list.

Agree. My basket was to replace / supplement allocations to called bonds & CP and other short duration credit used as a cash alternative.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: fareastwarriors on July 21, 2020, 10:03:23 AM
Ackman Gears Up for Unicorn Hunt With $4 Billion Blank-Check IPO

 Pershing-backed SPAC set to price Tuesday, trade Wednesday
 Listings by blank-check companies are already at all-time high

https://www.bloomberg.com/news/articles/2020-07-21/ackman-gears-up-for-unicorn-hunt-with-4-billion-blank-check-ipo?srnd=premium
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on July 22, 2020, 09:51:52 AM
Recent interview.

Ackman is 98% long, is short some high yield index but has no equity shorts, manages ~$11B (for contextualizing their $1B - potentially $3B in PSTH).

PSTH is up modestly so far; Mr. Market can only get so excited about a pile of cash.

Quote
Billionaire investor Bill Ackman told CNBC on Wednesday he’s bullish on the U.S. and markets over the long term, but companies with a high debt will have a hard time surviving as the country struggles to reopen fully.

“We are long-term bullish on America; We are long-term bullish on the markets,” Ackman said in a “Squawk Box” interview. “But I would say I’m cautious on markets over the next period of time. We have today a short position in a high-yield index. We are bearish on highly levered companies.”

“The highly levered businesses will struggle because it will take time for the economy to reopen,” he added. “I don’t think the Fed is going to bail out companies with too much debt.” Such companies carry a high level of debt to cash and therefore have a stronger likelihood of default or bankruptcy during a crisis.

Ackman is betting against high-yield companies at a time when the Federal Reserve is buying up recently downgraded “fallen angels,” companies that slipped from investment grade into junk due to the coronavirus pandemic.

The founder and CEO of Pershing Square Capital Management revealed he continued to own the same positions in Hilton, Restaurant Brands, Lowe’s and Starbucks. He added that his hedge fund is approximately “98% long.”

“We are not short any stocks. We are obviously bullish on America, owning restaurant companies, hotel companies, real estate development companies. These are a bet that the country will recover,” Ackman said.

Ackman turned heads on Wall Street earlier this year by pocketing more than $2 billion in bets against markets in March. The activist investor went on CNBC in mid-March to warn investors that “hell is coming” and urge the White House to shut down the country for a month. He later revealed his firm exited the short positions on March 23, just as the S&P 500 bottomed.

His dire comments later sparked controversy, with many saying his fund would profit from further market declines. His hedge fund managed $10.7 billion of assets as of June 9.

“I really blame CNBC,” Ackman said. “It took 15 seconds of my interview and then went around scaring people because it was good television. ... I gave a very bullish message. I said I was buying stocks.”
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on August 12, 2020, 03:03:01 PM
nice august so far...34% discount to NAV at $25, close to all time wides (there was brief 40 ish% in the throes of March).
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on August 28, 2020, 07:25:13 PM
https://assets.pershingsquareholdings.com/2020/08/28171601/Letter-to-Shareholders-Excerpted-from-the-2020-Semiannual-Financial-Statement.pdf

Bill Ackman at his absolute finest.

I am buying what this man is selling and regret having sold a share/trimmed.

What a freaking letter. Pound the table, Billy!

In all seriousness, probably will buy more.

Quote
It is conventional wisdom in the closed-ended fund investment community that strong performance, large buyback programs, the initiation of a quarterly dividend, and insider purchases by the manager should assist in reducing the discount to NAV at which a closed-ended fund trades.
Judged by this wisdom, we deserve high marks. Since our March 2018 annual letter, in fewer than two-and-one-half years, NAV per share has increased by 153%;6 PSH has repurchased 45.1 million shares representing 19.2% of shares outstanding; the company initiated a 10-cent quarterly dividend in the first quarter of 2019; and the Investment Manager and its affiliates have increased their beneficial ownership of PSH from 3.9% to 25.2%10 through open market purchases and share buybacks. Yet, in spite of all of the above, the discount has widened by approximately 1,000 basis points over the same period.
Whatever the explanation for today’s large discount, our strong preference is for the shares to trade at or above net asset value over the long term. The only consolation prize to the wide discount is that our share repurchases have provided us with an attractive incremental investment opportunity that has enhanced our returns to shareholders marginally in recent year

Quote
To increase the probability of our addition to the FTSE 100 index, at the end of this year, we will be converting all of PSH’s management shares to public shares, as management shares are not considered in the index inclusion calculation. This will add approximately 6 million public shares to our listed market capitalization. Had this conversion taken place previously, PSH would today be the 99th largest company in the index, and would only need to increase in market cap by 13.1%, all else remaining the same, in order to meet the FTSE 100 inclusion threshold.
PSH could today reach the necessary threshold if the current discount to NAV declined to 20%. This relatively modest reduction in discount could become self-fulfilling if investors: (1) expect that PSH will be added to the index in the short term, (2) believe that FTSE 100 inclusion will be a catalyst for a significant upward revaluation of the company, and (3) therefore buy PSH shares driving the discount narrower and our market cap above the relevant threshold.



Quote
In order to address these alignment issues, with PSTH we eliminated all forms of compensation, advisory fees, and founder shares. We further improved alignment issues by the Pershing Square funds committing to purchase a minimum of $1 billion of common stock and shareholder warrants on the same terms as PSTH’s public shareholders. In addition, the Pershing Square funds purchased so-called Sponsor Warrants for $65 million – their estimated fair market value at the time of the IPO – that will become 10-year warrants on 5.95% of the newly merged company shares, only if we successfully complete a transaction.
The Sponsor Warrants have a strike price 20% above PSTH’s IPO price, and are not transferable, salable or exercisable for

e first three years after the merger. The Sponsor Warrant’s valuation was determined in consultation with a nationally recognized valuation agent, which considered, among other factors, that if we did not complete a transaction by the 30-month term of the SPAC, the Sponsor Warrants would likely lose substantially all of their value.
We also negotiated and capped the underwriting fees payable at 1.8% of the SPAC’s minimum equity capital, further reducing frictional costs. We paid two-thirds of these fees with the purchase of the Sponsor Warrants, which reduces the total frictional costs of PSTH in a merger borne by shareholders and our merger partner to a de minimis amount.
We used the excess demand for the PSTH IPO to curate a shareholder list that would be the envy of any public company. We selected investors for their reputation as long-term, value-added owners. We expect our shareholder registry will contribute to PSTH’s appeal as a merger partner for a high-quality company.


Quote

The fact that PSTH trades at 106% of NAV is particularly notable when it is compared with the 33% discount to NAV (comprised of cash and marketable securities) at which PSH trades, as PSH is managed by the same investment team, owns 91% of the PSTH Sponsor Warrants, and is a minimum $1 billion forward purchaser, alongside the two Pershing Square private funds, of PSTH common stock and shareholder warrants, with the right to increase its forward purchase investment
a
While the Sponsor Warrants are valued at $84 million today,b in the event PSTH completes a successful merger, the Sponsor Warrants would be worth 1.5% to 2% of the equity market capitalization of the merged company at the time of completion of the merger (based on a Black Scholes valuation) depending on its stock price volatility. As PSTH is targeting a company with a post-merger market cap of $15 billion to as much as $30 billion or more, the Sponsor Warrants could become a material asset to PSH. This becomes even more likely if, as we expect, the merged company stock price increases above the initial transaction value, as the warrants, in that event, will become much more valuable.
At PSH’s current 33% discount to NAV, PSH shareholders are getting all of PSH’s $1.7 billion of net free cash, the Sponsor Warrants, the Forward Purchase commitment, the option to increase the Forward Purchase commitment, plus hundreds of millions of additional value for free. PSH’s undervaluation has enhanced the benefits of our ongoing buyback program that endeavors each day to purchase the maximum number of shares permitted under the buyback regulatory regime.
It is important to note that all of the economics of PSTH are going to PSH shareholders and our private fund investors. This is an unusual approach as nearly every other SPAC sponsor has chosen to keep all or substantially all of the founder economics of launching a SPAC for the individuals that control the sponsor, rather than for the other funds they manage on behalf of their investors.
As the largest invest


Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on August 28, 2020, 10:21:56 PM
Keep spreading the gospel, brother!  8)
Title: Re: NL:PSH - Pershing Square Holdings
Post by: 5xEBITDA on August 29, 2020, 09:56:16 AM
The only thing I might comment on is that I think it's slightly disingenuous to say "because PSTH trades above trust value the market thinks we'll find something good". PSTH common shares have embedded warrants that cannot be separated and shareholders only receive if they participate in whatever deal he finds, and this embedded warrant is different from the other warrants received by buying the PSTH unit. Like other SPACs, you can separate the regular warrants from the common share after a certain amount of time has passed, but with PSTH you cannot separate the additional warrant embedded within the common stock and you only get to keep that if you participate in the deal. So, and I haven't done the math to check this to specifically get the #s, but as long as the regular warrants of PSTH trade about $0 the common shares will incorporate their value in addition to the trust value...i.e., trading above trust on an absolute basis, but the equation is really premium / discount to NAV + embedded value of warrants to get there. No duh its gonna trade above super well because of the baked in warrant in the stock and its like free money to trade the unit around.   

Historically, super large SPACs ($500mn+) have not really traded as well as smaller SPACs because their size really limits the universe of stuff they can buy. I think PSTH will be successful in finding something cool because Ackman does have a very large network and still a pretty good reputation among executives in the industry.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on August 29, 2020, 10:03:35 AM
5xEBITDA, it’s quality posts like this that make you part of a shareholder list that would be the envy of any public company.

Quote
We used the excess demand for the PSTH IPO to curate a shareholder list that would be the envy of any public company. We selected investors for their reputation as long-term, value-added owners. We expect our shareholder registry will contribute to PSTH’s appeal as a merger partner for a high-quality company.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: 5xEBITDA on August 29, 2020, 10:59:43 AM
5xEBITDA, it’s quality posts like this that make you part of a shareholder list that would be the envy of any public company.

Quote
We used the excess demand for the PSTH IPO to curate a shareholder list that would be the envy of any public company. We selected investors for their reputation as long-term, value-added owners. We expect our shareholder registry will contribute to PSTH’s appeal as a merger partner for a high-quality company.

To be fair, I am more than happy to hang on to shares and participate in whatever deal he finds and looking forward to doing so. Changing market conditions require portfolio re-balancing.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on August 29, 2020, 12:44:33 PM
5xEBITDA, it’s quality posts like this that make you part of a shareholder list that would be the envy of any public company.

Quote
We used the excess demand for the PSTH IPO to curate a shareholder list that would be the envy of any public company. We selected investors for their reputation as long-term, value-added owners. We expect our shareholder registry will contribute to PSTH’s appeal as a merger partner for a high-quality company.
To be fair, I am more than happy to hang on to shares and participate in whatever deal he finds and looking forward to doing so. Changing market conditions require portfolio re-balancing.

i hope you know that I'm making fun of Bill SPACkman's over the top language, not you.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on August 31, 2020, 09:43:29 AM
I purchased some more PSH today, at a 95% premium to my lowest cost lot, which is a tough pill to swallow, but it’s about where it’s going, not where it’s been.

It is about a 5% position for pupil’s parents, the 2nd largest after Berkshire. This is after I trimmed some at lower prices a short while ago.I am more comfortable with the portfolio after earnings and progress on reopening and agree with most of Ackman’s arguments. Also have some excess cash from tech trims.

Maybe that’s just me drinking the kool-aid.

I think it’s pretty unusual to purchase a top performing fund at a 30% discount, ahead of a possible major index inclusion.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thowed on August 31, 2020, 01:21:00 PM
Thanks for the tip-off about the Interim letter.

Interesting stuff.  My anti-Ackman resolve may be slowly crumbling...!
Title: Re: NL:PSH - Pershing Square Holdings
Post by: petec on August 31, 2020, 02:43:21 PM
@pupil, can you weight your thesis/reason for holding between
1) the discount to NAV
2) your conviction in the current holdings
3) your conviction Ackman will make good decisions long term (10y) and outperform?

I’m interested, having got this one wrong over the years.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thowed on August 31, 2020, 03:53:01 PM
Pete, on 2) for me, some of this is 'diversification' as generally they aren't the kind of stocks I hold otherwise.

On 3) very hard to say - one has to hope that he 'stays humble'!  I'm also trying to work out a pattern of Hedge fund guys who get divorced, and any obvious effect on performance (including if there is then a new partner!).  Found one where there is a pattern, though it may be coincidence!

1) I'd see it as a bonus - it seems unlikely to widen much further out though.

As you say, I've got this wrong over the past few years, though hard not to after the Valeant & Herbalife debacles...
Title: Re: NL:PSH - Pershing Square Holdings
Post by: petec on September 01, 2020, 01:24:06 AM
To be clear, I was saying *I* have got this wrong in the past!
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on September 01, 2020, 04:13:56 AM
it's a combination of discount and Ackman, #1 and #3. But they are very much related. I had little interest in this vehicle at a 0% discount, so it is important to me (though my opinion of Ackman has improved since the great humbling/reset of strategy).

 I think many successful investors focus solely on the rate of intrinsic value growth of a business, and pay less attention to valuation/discount. I will probably always be a value biased guy and follow a "discount first, then underwrite the quality thereof second" process. Most hugely successful investors, particularly of late, do not follow such a process, but I gotta do what works for me.

If Berkshire went up 25% tomorrow, or Pershing Square went up 45% and their discounts closed, I'd own them, but in less size.

I think that Ackman will earn a reasonable net return over time. I've watched him and followed him in various forms for about a decade and I've concluded he's unlikely to blow up/permanently impair capital. I think his reputation as a blower upper of funds is not based in fact (and discussed that extensively a little bit back).

It will be a bumpy, high conviction, controversial and at times laughable ride, but I think the sum of the pluses and minuses will be a rate of compounding that preserves and grows purchasing power, likely above that of equities generally.

I made the argument that he wouldn't blow up at the height of Ackman/Valeant scare and was (figuratively*) buying the bonds. A long biased, low gross, fund of 10 stocks (even when you make mistakes) of decently quality businesses is simply not likely to blow up.
https://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/pshne-pershing-square-holdings/msg252983/#msg252983

If I don't think PSH will blow up, and I think Ackman is good enough for his fund to earn an equity like return over time, then I think PSH's "correct" discount is close to 0%. Discounts exists because of problems that cause something to earn a less than required return. Corporate overhead, misaligned incentives, tax frictions, etc. There are other reasons of course.

I think it's possible Ackman is one of the better investors of our time, but I am by no means betting on that. If I thought he was, I'd hold PSH in size all the way to a significant premium, which at this time, I probably wouldn't. I mean the guy has absolutely killed it on credit default swaps (2008 he only lost 13%, in part because he made a bilsky's on MBIA CDS and was macro aware as it relates to the housing crisis). He then hedged coronocrisis very well. I'm not saying he's Nostradamus, but I think this speaks to his overall engagement and tenacity. He's not buying sports teams and hanging out in the Hamptons enough to not be all in on his book. He actually cares and is in tune with what's going on / is picking up on things before others. I've met plenty of billionaire hedge fund/PE managers who are clipping management fees and just don't really care; they've won the game. Ackman hasn't won the game until he's thought of as a top 5 investor of his time, and that is a key weakness and strength. It's kind of funny in that PSH is a vehicle that really has no accountability, its a permanent capital LP w/ no real rights. Ackman could phone it in, but his ego/ambition doesn't allow that.

A closed end fund specialist might point out that Ackman has higher than normal fees, or that shares aren't that liquid, or that their capital return program isn't as consistent as some crappy CEF that they swing trade the discount on or whatever, or that the empirically observed average discount has been 18% since inception. I hear all those arguments, but from an overly theoretical perspective, if I think something will earn an appropriate return on equity / compound at a good rate, it doesn't deserve a discount to me and I will buy it, viewing the discount as an opportunity rather than "deserved"; I've held Tetragon since 2014/5 and the discount has widened from 40% to 60%. I don't really care that much because NAV has grown from $17->$24 and lots of dividends have been paid. The thesis that they'll earn an equity like return has been correct, so far.

The market may not agree with me for a very long time. 

I think Pershing Square has the ingredients to compound at a market or better return and therefore think it deserves to exist.  I don't know if I have super high conviction of outperformance over whatever equity benchmark over some time frame. I don't think one can be that precise. I obviously don't expect outperformance to the degree of 2019/2020 and don't expect him to pull another VRX and draw down by so much relative to the market like 2014/5. As a tangential note, I do believe that Pershing Square should attract high quality people to work there. No real outside money, not having to run short book, being able to actually do "private equity in public markets" at scale with lots of fess coming in is a very attractive job in my view. That's not a key component of the thesis, but I think PSH's draw as an employer has very much increased recently now that they're above HWM and really distinguished themself of late.

I am attracted to the large discount (21% return tailwind to 15% discount, 43% return to full re-rating) also because I think Ackman cares about the discount. He's purchased 20% of shares, initiated a dividend, is currently trying to increase liquidity and demand. That can't be said of a lot of people who run discounted vehicles. He's not a bureaucrat running some CEF at a large asset manager just clipping a salary. He cares and is doing all that I can ask. I wouldn't expect him to liquidate or to buy back stock even more aggressively (and decrease liquidity / AUM to his own detriment).

I don't love the current portfolio. I tolerate it and trust the underwriting they've done. As mentioned by others, it does provide diversification in that I am not attracted to QSR/CMG/LOW/A/FNMA etc. I liked it better when he owned Berkshire lol. but whatever; I trust the process.


*I couldn't actually buy the bonds, because $250K minimum, is/was too big a position for me.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: 5xEBITDA on September 01, 2020, 07:17:47 AM
This was a really great post thepupil, thanks for taking the time on it.

I agree that Ackman's reputation for blow ups is misplaced. Gotham Partners had very specific, idiosyncratic issues that are no way comparable to Pershing Square, and Valeant was what it was. I can think of many more investors who've made mistakes more embarrassing than getting involved so deeply in Valeant, Ackman is just very public and very in front of everyone which magnifies the mistakes. It didn't help that Valeant was right after the "Baby Buffett" feature on Forbes (I think? Or Barons, idk). Long form to say that he is still smart, and Pershing Square is still a very legit firm. If he was done, he wouldn't have capital.

I disagree that that PSH should trade at a 0% discount to NAV, however. I think its fair to assume there should be some "Ackman" discount, but no where near as high as it is now. I don't have a spreadsheet of other CEFs in front of me, but I'd expect this to probably trade in the median ragne of these plus whatever Ackman discount you want to apply. Maybe this should really be a 15% discount to NAV - still substantial.

It wouldn't surprise me to learn that the share structure of PSH is very unfriendly to shareholders as far as voting rights, which I believe you mentioned yourself. CEFs attract a certain type of investor who likes investing in these because they know, if things really go south or there's a problem, they have voting rights and can intervene with management. I wouldn't be surprised to learn if you couldn't do that with PSH. So, a natural part of the CEF buyer part is likely just not there which doesn't help the shares.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on September 01, 2020, 07:32:25 AM
Yep, it’s impractical to expect a 0% discount for all the reasons you mentioned. The CEF folks  like governance, fees, tender offers where they can get overallotments, predictability, hedge ability (for arbs. PSH scores poorly in those respects and we can’t expect the CEF crowd to solely lift up PSH to a reasonable discount.

There is also the issue of sheer size. You have to attract a fair amount of loyal holders/ true believers to   Because PSH is a big vehiclle, it’s not like it’s PEO where bulldog can come in and ruffle feathers.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: 5xEBITDA on September 01, 2020, 07:34:58 AM
Yep, it’s impractical to expect a 0% discount for all the reasons you mentioned. The CEF folks  like governance, fees, tender offers where they can get overallotments, predictability, hedge ability (for arbs. PSH scores poorly in those respects and we can’t expect the CEF crowd to solely lift up PSH to a reasonable discount.

There is also the issue of sheer size. You have to attract a fair amount of loyal holders/ true believers to   Because PSH is a big vehiclle, it’s not like it’s PEO where bulldog can come in and ruffle feathers.

Yep! Another interesting tidbit. You've mentioned Bulldog, who I am familiar with from my adventures with SPACs, but you're right that they are CEF activists. Saba Capital is also a good CEF activist, I'd say probably better than Bulldog but I can't back that up. Saba has done very well this year with credit, and I believe there is an article from Bloomberg talking about how Ackman has money with Saba. I am sure Saba owns some PSH shares, but given their relationship I think it is fair to say that one of the main players you'd expect to help close a CEF discount is effectively out of the market for it.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: John Hjorth on September 01, 2020, 08:25:28 AM
Good luck messing around with something, that you actually [perhaps] do not like, but it appears cheap.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on September 01, 2020, 10:08:00 AM
Good luck messing around with something, that you actually [perhaps] do not like, but it appears cheap.

theme for the day here, but not sure what you mean.

i don't follow what you mean by "messing around".

I've followed ackman for about a decade and invested a substantial amount of money with him in March/April of 2020. i then trimmed some shares on the way up. with more facts (and wildly different valuations on some other holdings), I reversed some of those trims and added a little more.

Title: Re: NL:PSH - Pershing Square Holdings
Post by: buffetteer1984 on September 01, 2020, 12:32:40 PM
Too many people love to hate on ackman for whatever reason i'm unsure but you can't argue against his performance.  He's batting close to .800 on all his collective investments and is up more than 800% since inception for pershing square (2005).  I really don't think there are many other investors that have done as well as him over the long term or have given as much detail of each of their investments. 
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gregmal on September 01, 2020, 12:37:06 PM
Ackman is one to cautiously admire, but also respect for what he is.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gregmal on September 02, 2020, 09:24:23 AM
Posted in another thread but relevant here, Ackman supposedly was going after AirBNB with the SPAC. Again, if nothing else, what a wily and opportunistic fellow.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thowed on September 02, 2020, 10:33:12 AM
To be clear, I was saying *I* have got this wrong in the past!

Apologies!  I dashed that off in haste, so it came out wrong.  I meant to say that, like you, I have *also* got this wrong in the past!

Pupil (a veritable misnomer), many thanks for your recent long post about PSH, more food for thought.

Gregmal - AirBNB - wow!  I hadn't heard that.

I agree about the portfolio - most of it is not stuff that I'd normally own, BUT in contrast to some previous eras, nothing looks especially controversial (though I don't know enough about Howard Hughes, and the money he put in for the raise earlier this year).  In addition, I find this sort of portfolio slightly more reassuring than buying most Tech at current prices.

God - I remember that Baby Buffett cover... Cringe!

Re: the CEF discount, I haven't looked into if London or Amsterdam is where most of the trades take place (I'd guess London).  LSE CEF discounts have tightened up over the past 5 years, and 0 to -5% is not unusual these days (whereas -10% used to be quite standard).  There is also still a paucity of decent USA CEFs listed on the LSE.  Against that is certain governance issues, especially with the long-term debt etc. I believe.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: villainx on September 02, 2020, 06:36:41 PM
For USA base folks, PSHZF is the share?  Is it preferable to be in regular trading account or IRA type?

Thanks in advance!
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on September 02, 2020, 07:01:46 PM
ownership by US persons is tricky, period. In fact, it's questionable whether an IRA of an accredited person can own it. It would be best to be owned in an IRA that's not a rollover or would not be considered ERISA money.

Owning in a taxable account is a no go unless you want to file PFIC form and have it taxed in an onerous fashion.

One can buy the less liquid ADR in a non rollover IRA of an accredited investor and I think that it's okay from what I've read.


The Placing Shares have not been and will not be registered under the applicable securities laws of the United States, Australia, Canada, Japan, New Zealand or South Africa. Subject to
certain exceptions, the Placing Shares may not be offered or sold within the United States, Australia, Canada, Japan, New Zealand or South Africa or into any other jurisdiction where to
do so would constitute a violation of applicable laws or regulations of such other jurisdiction or to any national, resident or citizen thereof. The Placing Shares may not be offered or sold to
or for the account or benefit of U.S. persons (‘‘U.S. Persons’’) as defined in Regulation S (‘‘Regulation S’’) under the U.S. Securities Act of 1933, as amended (the ‘‘Securities Act’’).
The Placing Shares are being offered and sold only to non-U.S. Persons in the Netherlands and selected other jurisdictions in offshore transactions in reliance on Regulation S, provided
such persons are also Qualified Eligible Persons (‘‘QEPs’’) under U.S. Commodity Futures Trading Commission (‘‘CFTC’’) Rule 4.7.
Neither the U.S. Securities and Exchange Commission (the ‘‘SEC’’) nor any U.S. state securities commission has approved or disapproved of the Placing Shares, nor have they passed upon
or endorsed the merit of the Placing or the accuracy or completeness of this Prospectus. Any representation to the contrary is a criminal offence in the United States. The Company has not
registered as an investment company under the U.S. Investment Company Act of 1940, as amended (the ‘‘Investment Company Act’’), and investors will not be entitled to the benefits of
that Act.
The Placing Shares may not be acquired by: (i) investors using assets of: (A) an ‘‘employee benefit plan’’ as defined in Section 3(3) of the U.S. Employee Retirement Income Security Act
of 1974, as amended from time to time (together with the applicable regulations thereunder, ‘‘ERISA’’), that is subject to Title I of ERISA; (B) a ‘‘plan’’ as defined in Section 4975 of the
U.S. Internal Revenue Code (the ‘‘IRC’’), including an individual retirement account or other arrangement that is subject to Section 4975 of the IRC; or (C) an entity which is deemed to
hold the assets of any of the foregoing types of plans, accounts or arrangements that is subject to Title I of ERISA or Section 4975 of the IRC (‘‘ERISA Plans’’); or (ii) a governmental,
church, non-U.S. or other employee benefit plan that is subject to any federal, state, local or non-U.S. law that is substantially similar to the provisions of Title I of ERISA or Section 4975
of the IRC.
Each Manager is acting exclusively

See this
Title: Re: NL:PSH - Pershing Square Holdings
Post by: fareastwarriors on September 02, 2020, 07:09:57 PM
For USA base folks, PSHZF is the share?  Is it preferable to be in regular trading account or IRA type?

Thanks in advance!

I own PSHZF in my Roth IRA.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on September 03, 2020, 05:48:44 AM
A wrinkle / setback and a pretty big error on Ackman's part it looks like, cast doubt on near term FTSE 100 inclusion.

I assume this is why PSH is down 4%, widening from a near term tight of  25/6% to about 30% (about average post covid).

PSH mid-year letter:
Quote
To increase the probability of our addition to the FTSE 100 index, at the end of this year, we will be converting all of PSH’s
management shares to public shares, as management shares are not considered in the index inclusion calculation.
This will
add approximately 6 million public shares to our listed market capitalization. Had this conversion taken place previously,
PSH would today be the 99th largest company in the index, and would only need to increase in market cap by 13.1%, all else
remaining the same, in order to meet the FTSE 100 inclusion threshold.

Announcement from FTSE today:
Quote
FTSE Russell announces that the shares in issue figure of 204,691,894 assigned to Pershing Square Holdings (BS7JCJ8, FTSE 250 constituent) at the June 2020 Review included unlisted Management shares.

In order to ensure the correct index composition at the September 2020 FTSE UK Index Series Review (conducted using data as at close on Tuesday 1 September 2020), Pershing Square Holdings' market capitalisation has been calculated using an updated share number of 198,711,866 and has been ranked accordingly.  The updated share number is based on the latest publicly available shares in issue figure as of 8 May 2020 (the cut-off date for share updates which were implemented in line with the June 2020 Review).

Please note that as part of the September 2020 share changes, the shares in issue figure of Pershing Square Holdings will be further reduced to 193,718,342 (effective after market close on Friday 18 September), based on information as of 14 August 2020 (the cut-off date for September 2020 review).

Title: Re: NL:PSH - Pershing Square Holdings
Post by: johnpane on September 03, 2020, 06:53:41 AM
That looks like FTSE's error, not Ackman's.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on September 03, 2020, 06:58:09 AM
hmmm. to me it looks like Ackman's. am i misinterpreting the sequence of events or misreading it?

He wrote his letter saying that they were going to list the unlisted management shares to increase the probability of index inclusion because the management shares are not considered in the calculation, so listing them will help the chances.

Then FTSE says they were included already in the June calculation.

So it seems to me that Ackman was wrong. Listing the management shares won't help. They were already "priced in/included" if you will.

the market's reaction also seems to indicate that Ackman made an error. there was a little excitement / discount tightening in the past few days and that just reversed. Right? NAV report is fine and at all time highs. No big news/moves on the holdings that i can see.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Jurgis on September 03, 2020, 07:00:41 AM
hmmm. to me it looks like Ackman's. am i misinterpreting the sequence of events or misreading it?

He wrote his letter saying that they were going to list the unlisted management shares to increase the probability of index inclusion because the management shares are not considered in the calculation, so listing them will help the chances.

Then FTSE says they were included already in the June calculation.

So it seems to me that Ackman was wrong. Listing the management shares won't help. They were already "priced in/included" if you will.

FTSE says that management shares were erroneously included in June calculation but won't be included going forward.
Title: Re: NL:PSH - Pershing Square Holdings
Post by: thepupil on September 03, 2020, 07:04:56 AM
Thank you Jurgis, makes sense, upon a slower read.

To jumble things further, when they list at year end, then they will be included

So:
June: included in error
September: error reversed excluded
December/March: included correctly after they lost them
Title: Re: NL:PSH - Pershing Square Holdings
Post by: Gregmal on September 03, 2020, 07:22:46 AM
Yea come on. Bill Ackman doesnt make mistakes. Just ask him!
Title: Re: PSH.L - Pershing Square Holdings
Post by: Liberty on September 04, 2020, 09:11:05 AM
Hour-long interview with Ackman from August 24:

https://youtu.be/v5hkTRYkXKI
Title: Re: PSH.L - Pershing Square Holdings
Post by: thowed on September 07, 2020, 03:19:58 AM
Just been looking again at PSH for notional CDS exposure and Cash.  I'm keen to see the latest for the end of August.


At end of July he had Unencumbered Cash of 22%!  That's punchy!

Meanwhile the notional CDS have come down from 8,952M at end May to 1,646M at end July.  That's in comparison to 44,871 at end of February when he had his 'moment'.

Discount pleasingly at 30 again, but wondering what this week holds for US equities and if I should wait a little longer... Anyway if it does he's got Cash to use.
Title: Re: PSH.L - Pershing Square Holdings
Post by: thepupil on September 08, 2020, 04:47:30 AM
Pershing Square Holdings: Reasons To Back Bill Ackman Into The End Of 2020

Nothing new here just offers some good stats (top 10% widest of discounts in UK for example)

https://www.google.com/amp/s/seekingalpha.com/amp/article/4372975-pershing-square-holdings-reasons-to-back-bill-ackman-end-of-2020
Title: Re: PSH.L - Pershing Square Holdings
Post by: fareastwarriors on September 20, 2020, 12:22:38 PM
Inside the Greatest Trade of All Time—and What Bill Ackman Is Investing in Now

https://www.barrons.com/articles/the-greatest-trade-of-all-timeand-what-bill-ackman-is-investing-in-now-51600457809?mod=hp_DAY_Theme_1_1 (https://www.barrons.com/articles/the-greatest-trade-of-all-timeand-what-bill-ackman-is-investing-in-now-51600457809?mod=hp_DAY_Theme_1_1)


There are many worthwhile candidates on Wall Street for the Greatest Trade of All Time. There’s Jesse Livermore’s bet that the stock market would fall in 1929. He pocketed something like $100 million in profit, akin to $1.5 billion today. There is George Soros’ 1992 bet that the British pound would fall against a basket of other currencies. When it did, the Hungarian-American investor made $1 billion. Then, of course, there is John Paulson’s extraordinary bet in the years leading up to, and through, the 2008 financial crisis that the market for mortgage-related securities would collapse. He made a profit on the order of $20 billion for his hedge fund investors and himself, as chronicled in Wall Street Journal reporter Greg Zuckerman’s bestselling book, The Greatest Trade Ever.

Then there is what Bill Ackman did in March 2020. In the space of three weeks, as the Covid-19 pandemic was engulfing the globe, Ackman turned a $27 million premium paid to buy credit default swaps into a profit of $2.6 billion. He then reinvested a chunk of that windfall in the long positions he wanted to protect by buying the insurance in the first place. In the ensuing dramatic stock market recovery, Ackman made another $1 billion. In short, Ackman’s $27 million bet has netted him and his investors $3.6 billion. The trade might not rank up there with Paulson’s on an absolute basis—$3.6 billion is not $20 billion, after all. But on an internal rate-of-return basis, which accounts for the time value of money and is one of the most important measures of performance in finance, what Ackman did earlier this year may well rank as the Greatest Trade of All Time. No one had ever made 100 times his money in 10 days. And the scale was big enough to matter.
Ackman, of course, is the flamboyant 54-year-old founder of Pershing Square Capital Management, known for his massive wagers, usually on the direction of individual stocks. He isn’t typically known for being a trader. He’s more of a buy-and-hold kind of guy, not unlike his hero, Warren Buffett. Ackman has had some major wins in the past. He doubled his $1.4 billion investment in Canadian Pacific Railway in less than a year and turned a $60 million investment in General Growth Properties into $3.5 billion. But, given Ackman’s lightning-rod personality, he’s even better known for the bets that failed. Among them are his $1 billion face-plant shorting the shares of Herbalife Nutrition (ticker: HLF), the controversial vitamin-supplement manufacturer, and the $4 billion he lost investing in Valeant Pharmaceuticals. The years 2015-18 were disastrous for Ackman; his funds lost money every year, while the S&P 500 index was up (with the exception of 2018). Many people thought Ackman was toast.
But he proved the doubters wrong. In 2019, when the S&P 500 was up 31.5%, Pershing Square was up 58.1%. He’s up an additional 50%, net of fees, through Sept. 15, and his assets under management are back to $11 billion, although that’s down considerably from the $20 billion he once managed.
Though he sees opportunities in the market, Ackman is getting worried again about the macro picture. He thinks we’re in for another spike of Covid-19 cases as colder weather sets in. “The bad news is you’re going to start to see infection rates starting to increase,” he says. On the other hand, there will probably be therapeutics and vaccines to help slow the infection and death rates in the next three to six months. “Those will be the countervailing forces, with the general trend being in favor of putting this behind us,” he adds.
Ackman is more worried about volatility in the financial markets related to the outcome of a close presidential election, if, say, Donald Trump appears to win on election night but Joe Biden wins when mail-in ballots are counted weeks later. “It will not be a fun period in American history, where people feel like the election was stolen from them one way or another,” he says.
Regardless, there will be confusion and unknowns. “If we have a new president, then there’s uncertainty from a policy perspective,” Ackman says. “And if Trump is re-elected, then we have uncertainty in terms of what Trump’s second term is going to look like. It’s going to be a period of political uncertainty. And uncertainty is not the friend of markets.”
Along with his early-2019 marriage to Neri Oxman and their toddler daughter, much of the bounce in Ackman’s step these days comes from his March trade. It all started with a nightmare. Ackman likes to think of himself as Mr. Optimist when it comes to stocks—Herbalife aside. But toward the end of January, he was getting “increasingly bearish” as he learned more about the coronavirus, which had started to spread around the world. By then, the stock and bond markets were both priced for perfection. The Dow Jones Industrial Average hit its peak of 29,551 on Feb. 12, and the average yield on high-yield bonds was 5%, when it arguably should have been twice that on a risk-adjusted basis. Ackman says that he didn’t think the highflying markets could last: “My nightmare was, you had this virus that replicates and infects incredibly rapidly.”

He considered locking in some gains by selling big holdings such as Lowe’s (LOW), Chipotle Mexican Grill (CMG), Agilent Technologies (A), and Hilton Worldwide (HLT). He had already sold his stake in Starbucks (SBUX); it had reached his valuation estimate, and its exposure to China was a concern. And he trimmed his 20% position in Chipotle to 15%. But he’s on the board of many of the companies he has big positions in, and there are tax considerations for selling, given how well the stocks had performed. “We’re very supportive of management,” he says. “We’re long-term investors, and we’d look bad if we just blow it out.”

Instead, Ackman hedged his long exposure by buying insurance in case the spreads in the bond market widened as the fear of the virus increased. Starting around Feb. 22, he bought protection on three different bond indexes: the U.S. investment-grade bond index, the European investment-grade bond index, and the U.S. high-yield bond index. Since fear was seriously out of style at the time, Ackman’s cost of protection was very low. “The market for credit default swaps had been so tight that the spreads were quoted in fractions of a basis point,” he says.
This was no small operation. Ackman was looking to buy more than $50 billion of notional protection. It took a few days before his intermediaries at Bank of America, Citigroup, and Goldman Sachs could find a principal willing to quote him the protection in $5 billion increments. His agents told the market that a “nontraditional account” was buying. That characterization of Pershing Square was a little misleading, but it was true that Ackman had not bought any CDS since before the 2008 financial crisis. He says that the sellers of the insurance—he thinks they included funds managed by BlackRock and Bridgewater, the huge hedge fund run by Ray Dalio—must have thought, “This trade is only ratcheting in…and some stupid guy who doesn’t know [expletive] about CDS has come into our market and is buying like crazy.” (Bridgewater and BlackRock declined to comment.) Ackman and his partners debated the idea of selling stocks, but instead made the hedge bigger. He concluded that the risk was asymmetrical: lots of upside for little cost.

After a week of buying protection, Ackman had accumulated $51 billion of notional protection on the U.S. investment-grade bond index, $18 billion of protection on the European investment-grade bond index, and $2.5 billion of protection on the U.S. high-yield bond index. He says that he owned 26% of the investment-grade bond index at one point. “Imagine someone buying 26% of the S&P 500,” he says with pride. He committed to spending $500 million in annual premiums. But he figured that the hedge would be unwound in 90 days, max, and would cost $125 million. “We viewed this as a trade,” he says, “not a fundamental bet.” He didn’t think that investment-grade companies were going to default en masse. Rather, he assumed that the spreads between Treasury bonds and corporate bonds would widen. Either way, it was a massive notional bet that investors would panic because of the economic implications of the spreading virus, and that he would benefit when they did.
Barely a week after he had put the hedges on, Ackman’s bet began to pay off in a big way. Spreads were blowing out, just as he’d hoped. By March 9, his CDS portfolio was worth $1.8 billion; three days later, it was $2.75 billion. “I’m thinking, ‘Wow, unbelievable!’ ” he says.
But the market was increasingly volatile. On March 9, the Dow plummeted 2,103 points; the next day, the index leapt 1,167 points. The value of Ackman’s hedge was bouncing around, too. “Our hedge goes from being $2.7 billion to losing $800 million of its value,” he says. “It goes to being worth $1.9 billion.” Now he had a new challenge. “The problem with putting on something of huge size,” Ackman says, is that “you have to take it off.”
The boffo CDS position suddenly made up 40% of his portfolio. It was too much volatility even for a fearless hedge fund manager. “It wasn’t risky when we put it on,” he said. “But it becomes very risky, in a sense, now that it’s a 40% position. In a week, it became worth $2.7 billion. And in a week, it can go back to zero.”
By the second week of March, Ackman says, Trump was taking the virus more seriously. He predicted that Treasury Secretary Steve Mnuchin and Jerome Powell, chairman of the Federal Reserve, were going to take substantial action to protect the capital markets. “We’re not going to have a financial crisis like the last time,” Ackman figured. “Would I rather have 40% of the portfolio in something that could go to zero if the government does the right thing?” he asked himself. “Or would I rather sell that whole thing and buy stocks at hugely discounted prices?” Three weeks in, he decided to lock in his gains. He had spent barely $27 million on the insurance premiums, “and it went for $2.7 billion. Then we decided to get out. We sold as quickly as we could.”
Easier said than done. “We’ve got to take the CDS trade off without moving the market,” he says, “and everyone in the market knows how much protection we bought, or they think they know. That’s a dangerous place to be.”
On March 18, Ackman appeared on CNBC. At that point, Pershing Square had sold half of the CDS position and plowed $2.1 billion—some of his profits to that point, plus $800 million cash on hand—back into the stock market. Ackman says he would have sold the entire CDS position on March 12, if he could have. But just as it took time to put the position on, it took seven or eight days to unwind it.
His 28-minute CNBC appearance caused a firestorm. He says that his intention was to send a “very bullish message.” It wasn’t received that way. “I said, ‘Look, we’re at a fork in the road. One path leads to death and destruction and hell is coming. That’s if we do nothing about the virus and it runs roughshod over the country, and we’re in a rolling 18-month disaster and no company can survive. Or we do a hard shutdown of the country for 30 days, but we’re out of the soup in a very short period of time. We can reopen the economy. Everyone’s got to wear masks. I’m very confident the government is going to do the right thing, and that’s why I’m buying stocks today.’ ”
Instead of calming people, Ackman’s comments scared the bejeezus out of viewers. The Dow, down 6.5% for the day when he started talking, was down 10% when he finished. CNBC played the clip of his most alarming comments over and over again. People thought that Ackman was talking the market down to increase the value of his CDS hedges. In fact, he had already unwound half of the hedge and had been buying stocks in a big way. He says his portfolio lost money that day.
The CNBC fiasco aside, Ackman is understandably ecstatic about the trade. He says his “timing was impeccable” in the execution and the successful unwind of the trade three weeks later. “We got out of 26% of the [investment grade] index without moving the market at all,” he says. Even Dan Loeb, his occasional hedge fund nemesis, tipped his hat. “He found a great asymmetric way to hedge market risk at a very low cost,” Loeb tells Barron’s. “He nailed it in terms of his timing.”
Ackman is once again completely long the market. “We have no hedges on,” he says. He remains bullish and maintains high conviction on his holdings. “For the 10 that we own, I think they’ll all be meaningfully higher a year from now,” he says. He regrets selling that 5% stake in Chipotle in March at $900. The shares are more than $1,200 now. “It’s got an amazing digital offering, and a huge percent of their customers went [to] digital delivery, and they’re not losing those customers as the stores reopen for in-house dining and pickup,” he explains. He held on to Lowe’s, which he says is a “huge beneficiary” of the pandemic-inspired home-improvement craze. Another holding is Agilent, the maker of scientific equipment, which has improved its operating margins without layoffs or furloughs, he says, suggesting to him that the current valuation of the company “does not give sufficient recognition to the company’s high-quality business model.”
Ackman bought, and then sold, Berkshire Hathaway (BRK.A). He was waiting for Buffett to deploy some of his $150 billion cash pile after the market crashed in March. But that didn’t happen until the market had nearly fully recovered. He remains in awe of Buffett but decided that he wants to invest his cash himself. Ackman also bought, and quickly sold, Alphabet (GOOGL) stock for only a small profit. “Stupid,” he says.

Aside from Ackman himself, the beneficiaries of his recent investing prowess include teacher pension funds in Texas and Arkansas, clients of EnTrust Global, the second-largest holder of Ackman’s Pershing Square Holdings. Unions representing bakers and pipe fitters also have exposure to Ackman. As Barron’s has written, individual investors can invest with Ackman via Pershing Square Holdings (PSH.Netherlands), an overseas closed-end fund available to U.S. investors.

There’s no re-creating the March trade. The cost of insurance is too high now. Instead, “we’re keeping a pile of cash around,” Ackman says. He has his shiny, new $4 billion SPAC—and he’s on the prowl. And he has his portfolio of what he considers “super-high-quality businesses that are reasonably insulated from what’s going on in the world.”
In fact, Ackman recognizes that their outsize success is an unfortunate consequence of our new, grim, reality: “If you own super-resilient businesses, they’re going to do better than they would have had there been no crisis,” he says. “The stock market represents the strength of the best and most dominant, best-capitalized companies, and the stock market that doesn’t exist is a market of private, family-owned mom-and-pop stores, and that’s the decimated part of America right now.”
Title: Re: PSH.L - Pershing Square Holdings
Post by: ValueMaven on September 20, 2020, 12:55:18 PM
Complex tax treatment for U.S. Investors - similar to a K1 is what explains most of the discount to NAV.  I dont believe you can buy this in an IRA, and in a taxable account - you are hit with complex filings.  Does anyone have a good view on this??
Title: Re: PSH.L - Pershing Square Holdings
Post by: Jurgis on September 20, 2020, 07:40:18 PM
Complex tax treatment for U.S. Investors - similar to a K1 is what explains most of the discount to NAV.  I dont believe you can buy this in an IRA, and in a taxable account - you are hit with complex filings.  Does anyone have a good view on this??

Read the thread. thepupil has discussed this couple times already. Yeah, you should not own this in taxable account. Regarding IRA, it's your decision ultimately.
Title: Re: PSH.L - Pershing Square Holdings
Post by: thepupil on September 21, 2020, 04:03:01 AM
Complex tax treatment for U.S. Investors - similar to a K1 is what explains most of the discount to NAV.  I dont believe you can buy this in an IRA, and in a taxable account - you are hit with complex filings.  Does anyone have a good view on this??

I would push back a little that it "explains the discount". Pershing Square came public at NAV and was sold to international investors and US investors aware of the complex tax treatment. There are many similar funds in the UK/Netherlands that don't trade at such a discount. Would it help close the discount if these things were not in place? Absolutely! Ackman's brand is stronger in the US.

As has been said, this is a PFIC and should not be owned in a taxable account unless you want to make the requisite filings. there's no question there. 

I own the ADR in an IRA of an accredited investor. The IRA is not a rollover IRA, such that it can not be considered "ERISA" assets, as from my read, you potentially shouldn't invest ERISA money in PSH because it isn't registered with the SEC.

Can you own a PFIC in an IRA? the answer to that, in my opinion, is YES.

There are other potential issues. Which ones are you thinkin about specifically (UBTI? Foreign withholding tax? etc?).

Owning the ADR helps with some foreign holding reporting requirements. I don't think one could argue purchasing PSH = a "prohibited transaction".

PFIC:

https://www.lexology.com/library/detail.aspx?g=833d6ea6-ecaa-4210-a9d4-90b1fcf008ff#:~:text=General%20rules&text=As%20a%20result%2C%20for%20instance,subject%20to%20the%20PFIC%20rules.
Quote
First, the Final Regulations modify the definition of shareholder as announced by the US Treasury and the IRS in Notice 2014-28, whereby a United States (US) person shall not be treated as a shareholder of a PFIC to the extent such person owns PFIC stock through a tax-exempt organization or account. This effectively extends the exemption that was already afforded to the tax exempt organization under the temporary and proposed regulations to the US shareholder(s) of such organization, and expands the exemption to encompass tax exempt accounts as well. As a result, for instance, a US person owning stock of a PFIC through an individual retirement account (IRA) described in Section 408(a) will not be treated as the shareholder of the PFIC stock, and in turn, is not subject to the PFIC rules. Because Notice 2014-28 originally provided for the aforementioned exemption, it will be effective for the taxable years of US persons who own stock of a PFIC through a tax-exempt organization or account ending on or after December 31, 2013.

https://www.ey.com/Publication/vwLUAssets/US_persons_holding_PFIC_stock_through_tax-exempt_organizations_or_accounts_will_be_exempt_from_Form_8621_filing_requirements/$FILE/2014US_CM4364_US%20persons%20holding%20PFIC%20stock%20through%20tax-exempt%20orgs%20to%20be%20exempt%20from%20Form%208621%20filing%20reqs.pdf


I would note that an SEC registered mutual fund does own PSH NA. Perhaps they file the PFIC stuff on behalf of the underlying investors.
https://matissefunds.com/total-returns-for-period-ending-63014/facts-and-reports/

The brokerages themselves are split on the issue
https://www.barrons.com/articles/how-to-buy-bill-ackman-dan-loeb-on-the-cheap-1458970084
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In the U.S., individual investors often need to be “qualified”—that is, have substantial income and liquid net worth—in order to buy hedge funds. The Ackman and Loeb funds, in contrast, can be purchased through many brokerage firms, including Merrill Lynch and Fidelity, without restrictions. Charles Schwab allows purchases with some restrictions, but Morgan Stanley allows only qualified investors with a net worth of $25 million or more to buy the two funds, as they aren’t registered in the U.S.
Title: Re: PSH.L - Pershing Square Holdings
Post by: ukvalueinvestment on September 21, 2020, 05:06:58 AM
Can it really be correct to say that a demand issue in the US tax treatment is the cause of the discount?

After all investors all over the world have the ability to price up Bill Ackman risk and the merits of his vehicle.

If this was a screaming buy then plenty of UK investors would have done so.

I suspect that, like me, they want to like it but are put off by the structurally high fees and the fact that Ackman seems to have the potential to go "off piste" (Valeant, Herbalife) (ie same underlying concerns as US investors)
Title: Re: PSH.L - Pershing Square Holdings
Post by: aws on September 24, 2020, 12:33:41 PM
It looks like they suspended their repurchases, since there hasn't been any announcements since September 3rd and they used to announce almost daily.  Perhaps that's to increase the chance of the FTSE inclusion people were talking about, but a side effect is the discount has also jumped back up to 35% of NAV.