Pershing Square Holdings, a £11.9bn investment trust managed by Bill Ackman, has doubled its share buyback programme to $200m (£159m) as it seeks to address a persistent 34% discount on its shares, according to a report by Citywire.
The trust announced that a second programme of equal size will follow once its current $100m buyback programme is completed.
‘The larger size of the programme is intended to reduce the risk that it is exhausted during a period when there are trading window restrictions on new authorisations,’ the closed-end fund said in a stock exchange notice, with the buybacks aiming to increase net asset value (NAV) per share while reducing the fund’s capital.
Since launching the current buyback programme on 27 November, the FTSE 100-listed trust has spent $29.3m, bringing its total buybacks since May 2017 to $1.4bn.
Pershing Square had seen its share discount narrow to 20% earlier in 2024 after announcing plans to raise capital for a US-listed closed-end fund, Pershing Square USA, which was expected to generate fee-sharing benefits for the trust.
However, after shelving those plans in July and experiencing a period of underperformance against the S&P 500 benchmark, the discount widened again. Returns were particularly affected by the underperformance of Universal Music Group, a major holding.
In August, the board reiterated its commitment to monitoring the discount but acknowledged concerns from some investors. Critics have suggested that the increased buyback amount, equivalent to only 1.3% of net assets, may fall short given the trust’s portfolio is concentrated in long positions in liquid, listed companies.
The expanded buyback follows Pershing Square’s decision to delist from Euronext Amsterdam, a cost-saving move designed to focus on the London market.
While the trust delivered positive returns in the first half of 2024, its shares have traded at an average 28% discount over the past year. Shareholders saw gains of 8.4% in sterling terms over the same period, supported by a portfolio of 13 predominantly US stocks.
Top holdings include Alphabet, Brookfield, and Canadian Pacific Kansas City, a railway company connecting Canada, the US, and Mexico. In August, Ackman retained shares in Seaport Entertainment Group, which spun out from Howard Hughes Holdings. Seaport owns New York City real estate and the Las Vegas Aviators, a Minor League Baseball team.
Over the past five years, the trust has delivered shareholder returns of 174%, significantly outpacing the S&P500’s 107%.
