Bank of America has initiated coverage on Pershing Square Holdings with a Neutral rating, describing Bill Ackman’s investment firm as a “Baby Buffett” model that is helping democratise hedge fund ownership for retail investors, according to a report by Benzinga.
The bank assigned a $42 price target to Pershing Square, highlighting its combination of permanent capital, concentrated investing and scalable fee economics, which analysts said mirrors elements of Berkshire Hathaway’s long-term compounding strategy.
“Pershing Square earns a royalty on compounding and is looking to replicate Berkshire,” BofA analyst Craig Siegenthaler wrote.
The report noted that roughly 96% of Pershing Square’s fee-paying assets are tied up in permanent capital vehicles, insulating the firm from redemption pressure and allowing it to hold concentrated positions through market cycles.
BofA said the structure gives Ackman’s firm a significant advantage over traditional hedge funds and private equity managers that depend heavily on fundraising and investor flows.
The bank also pointed to Ackman’s growing public profile and Pershing Square’s strong brand recognition, alongside a long-term annualised return record of 16% since inception, compared with 11% for the S&P 500.
Pershing Square’s portfolio includes high-profile holdings such as Chipotle Mexican Grill, Hilton Worldwide Holdings, Lowe’s and Universal Music Group.
Despite the favourable outlook, BofA stopped short of recommending the stock, citing valuation concerns, concentrated portfolio risk and dependence on Ackman himself.
The report also highlighted the persistent discount to net asset value at Pershing Square’s London-listed closed-end fund, which has historically traded below NAV since launching in 2014.
