Pershing Square Holdings (fund-level portfolio update) PSH
After a fourth losing year driven by Valeant and Herbalife, Pershing Square has downsized, returned to core principles, and offers PSH investors an attractive reset entry point.
Thesis
Pershing Square's 2018 London investor presentation, delivered by Bill Ackman, recaps a fourth consecutive year of negative returns at PSH (-4.0% vs. +21.8% S&P 500) driven by losses in Herbalife, Mondelez, Fannie/Freddie, Chipotle and Valeant, partly offset by wins from Restaurant Brands (+5.2%) and ADP (+3.5%). Ackman frames a 'return to our roots': cutting headcount from 70 to 45, recommitting to seven core investment principles, and pivoting back to high-conviction activism at ADP and Chipotle. Performance fees are waived until PSH crosses its high-water mark — requiring a ~50% NAV climb. To address PSH's persistent ~20% discount to NAV, the firm announced a $300M tender offer by PSCM affiliates, an LSE listing, FTSE 250 inclusion, and a 5% open-market buyback. The pitch: a humbled, smaller, principle-driven manager with reset incentives is uniquely attractive now.
The three reasons
- 1
Restructured to a smaller investment-centric team (70 down to 45 employees) and reaffirmed seven core investment principles
- 2
ADP and Chipotle activist campaigns are in early stages of substantial value creation
- 3
$300M tender, LSE listing, and 5% buyback program target PSH's persistent ~20% discount to NAV
Primary demands
- Approve removal of 4.99% ownership limit at PSH AGM in April 2018 to enable larger capital returns
- Support PSCM-affiliate tender offer for up to $300M of PSH shares as alignment-of-interest signal
- ADP: deliver Employer Services growth from 2-4% to 7%+ and operating margins from 19% to 35%+, implying ~$10 EPS by FY2022
KPIs cited
Pattern membership
Composition what's on the 58 slides
Slide gallery ·
Notes
Fund-level annual investor presentation (London, 29-Jan-2018), not a single-target activist deck. Combines a self-reflective post-mortem on three losing years (Valeant, Herbalife, etc.) with a meta-pitch to invest in/hold PSH after organizational restructuring. The 'Evolution of Pershing Square Organization' chart (p18) overlays headcount, AUM and cumulative net return — an unusual and visually effective before/after framing of the firm itself. Annotated share-price-history charts with event callouts are a recurring template (ADP, QSR, MDLZ, HHC, CMG, FNMA/FMCC, PAH, NKE, HLF). PSH Discount History chart (p53) is the closest thing to a peer-gap visual at the fund level. SCQA fields left null per guidance for fund-level updates with no single thesis. Author attributed to Ackman as CEO/PM though delivered by team (Anne Farlow opens as Chairperson).