Pershing Square’s investment vehicles are facing a challenging year, with both his flagship fund and recently launched US closed-end fund underperforming the broader equity market, according to a report by Barron’s.
Pershing Square Holdings, the hedge fund manager’s long-established listed vehicle, was down 10% year-to-date through 9 June, according to fund data. By comparison, the S&P 500 gained roughly 8% over the same period.
Ackman’s newly launched Pershing Square USA fund meanwhile, has had a difficult start since its April initial public offering. The nearly $5bn vehicle closed at $39.68 on Monday, more than 20% below its IPO price of $50 and at a discount of around 15% to its latest reported net asset value.
In a post on X, Ackman highlighted the fund’s portfolio, saying approximately 85% of its capital has been invested across 12 companies. Disclosed holdings include Amazon, Microsoft, Uber Technologies, Meta Platforms, Brookfield, Restaurant Brands International, Fannie Mae and Freddie Mac. The remaining positions are expected to be revealed in the fund’s second-quarter report.
The portfolio shares considerable overlap with Pershing Square Holdings, which manages roughly $13bn in net assets and represents the larger of Ackman’s listed investment vehicles.
Ackman has long favoured concentrated positions in large-cap growth companies that he views as high-quality businesses with durable competitive advantages. However, the strategy has missed some of the market’s strongest-performing areas, including semiconductor and memory-related stocks that have driven recent gains in US equities.
The recent weakness has also weighed on longer-term relative returns. Pershing Square Holdings trailed the S&P 500 over the 12 months to 31 May and has lagged the benchmark over the past five years, although it remains ahead on a 10-year basis.
Ackman argued that the current valuation of Pershing Square USA presents an opportunity for investors, noting that the fund trades at a discount to the value of its underlying holdings.
Several key holdings, including Meta Platforms and Uber, have declined by around 10% this year, contributing to weaker fund performance. Both stocks rebounded sharply on Monday, potentially providing support to near-term returns.
Despite the recent underperformance, some investors view the discounts on Ackman’s listed funds as attractive.
A persistent challenge for both funds, however, remains their fee structures. Pershing Square Holdings charges a 1.5% management fee alongside a 16% performance fee, while Pershing Square USA levies a 2% annual management fee without an incentive component.
Those charges stand above many US closed-end funds and low-cost index products, potentially contributing to investor reluctance amid a period of weaker returns.
