Contrarian Corpus
activist full deck follow up
2018-01-29 · 58 pages

Pershing Square Holdings (PSH) — portfolio review PSH

N 3 Narrative
V 3 Visual
C 3 Craft
Original source ↗

The three reasons

  1. 1

    Returning to roots: smaller investment-centric team, reaffirmed core principles, growth from returns not AUM

  2. 2

    Idea engine intact — ADP, Hilton, Nike, S&P Global sourced in 2017; ADP up 18% already

  3. 3

    PSH NAV discount ~22% is closing via $300mm tender + open-market buyback + FTSE inclusion

Primary demands

  • Close PSH's discount to NAV via $300mm tender offer and ongoing buyback
  • Remove PSH's 4.99% ownership limit at April 2018 AGM to allow greater capital return flexibility
  • Continue driving margin expansion at ADP (from ~19% to 35%+ Employer Services operating margin)
  • Support recruitment of world-class CEO at Chipotle to unlock turnaround
  • Execute announced separation of Platform Specialty Products to close sum-of-parts discount

KPIs cited

PSH 2017 net return
(4.0%) vs S&P 500 +21.8%
Pershing Square L.P. cumulative net return since 2004 inception
493.6% vs S&P 500 220.8% through 12/31/2017
Total firm AUM
$8.8bn at 12/31/2017, down from $18bn peak in 2015
Headcount reduction
70 employees in 2016 → 45 in 2018 (~35% cut); investment team steady at 8–10
ADP Employer Services operating margin opportunity
From ~19% today to 35%+, with growth from ~2-4% to ~7%+
ADP valuation
~24x FY2019 EPS pro-forma for tax reform, slightly below entry multiple
QSR unit growth and margins
6% net unit growth at Burger King, +250bps EBITDA margin; Popeyes +1,000bps EBITDA margin
QSR valuation gap
~21x 2018 FCF vs peers ~25x (McDonald's, Yum, Domino's, Dunkin')
MDLZ valuation
18x 2018E EPS, ~15% discount to peers and historical average
PAH EBITDA multiple gap
9.5x 2018E vs Cabot Micro 13x and FMC 12x
PSH discount to NAV
Widened to ~22% in late 2017 from near flat in 2014–15
PSH buyback execution
5.5M shares repurchased at 20.1% discount to NAV for $77.2mm through Jan 2018
Herbalife EPS decline
~19% lower since 2013 despite 33% share shrink; U.S. sales -18% YoY post FTC settlement

Pattern membership

Where this document fits across the library's 12 rhetorical / structural patterns.

Notable slides (7)

Notes

Annual portfolio-review deck (London investor meeting Jan 29, 2018) rather than a single-target activist thesis — follows a rough year (2017: -4.0% vs S&P +21.8%) and the Valeant wind-down. Cover slide uses PSH logo not PSCM. Organized as: Chairperson's Intro → 2017 Performance → Business & Org Update ('Returning to Our Roots' — staff cut from 70→45) → position-by-position walk (ADP, QSR, MDLZ, HHC, CMG, FNMA/FMCC, PAH, NKE, HLF) → Exited positions → PSH Discount Management (tender + buyback). Each active position follows a two-slide pattern: thesis recap + annotated share-price chart with campaign-event callouts — a clean replicable template worth cataloging. Visual style is classic Pershing institutional (navy/blue headers, Arial-style sans, table-heavy) — functional but not 'Ackman CP 2012' tier. Not adversarial: tone is reflective, almost post-mortem in places ('Experience is making mistakes and learning from them'). Notable slide 18 (org evolution with AUM + headcount + VRX collapse annotation) and slide 32 (ADP share price with proxy campaign timeline) are the strongest storytelling artifacts. ADP deck itself (2017) is the primary activist material; this 2018 deck references it as a follow-up campaign update.