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Bill Ackman’s IPO of Pershing Square closed-end fund delayed: NYSE

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4 months ago

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Bill Ackman, founder and CEO of Pershing Square Capital Management.

Adam Jeffery | CNBC

Billionaire investor Bill Ackman is delaying the highly scrutinized listing of Pershing Square’s U.S. closed-end fund, according to a notice on the New York Stock Exchange’s website.

The initial public offering of Pershing Square USA Ltd., with the ticker PSUS, is pending on a date to be announced, according to the website. The deal is likely to price next week, according to a person familiar with the matter.

Ackman is now looking to raise $2.5 billion to $4 billion for the fund, well short of the $25 billion target from a few weeks ago, according to a regulatory filing dated Thursday.

Closed-end funds sell a set number of shares during their IPO, and they trade on market exchanges after their debut. The price of the fund does not necessarily match the shares’ net asset value, so the fund may trade at a premium or a discount.

“There is enormous sensitivity to the size of the transaction,” Ackman said in a July 24 letter to investors that was included in the filing. “Particularly in light of the novelty of the structure and closed end funds’ very negative trading history, it requires a significant leap of faith and ultimately careful analysis and judgment for investors to recognize that this closed end company will trade at a premium after the IPO when very few in history have done so.”

Pershing Square had $18.7 billion in assets under management at the end of June. Most of its capital is in Pershing Square Holdings, a $15 billion closed-end fund that trades in Europe. Ackman is seeking to offer a similar closed-end fund listed on the New York Stock Exchange, a move that could pave the way for an IPO of his management company.

The public listing of Ackman’s fund is seen as a move to leverage his following among Main Street investors after he accumulated more than one million followers on social media platform X, commenting on issues ranging from antisemitism to the presidential election. The publicly traded closed-end fund is expected to invest in 12 to 24 large-cap, investment-grade, “durable growth” companies in North America.

In the roadshow presentation that he made public, Ackman highlighted the challenge in managing traditional hedge funds that investors can yank their money out of any time, which can result in constant fundraising and soothing of investors. The advantage of managing permanent capital is that it makes him more focused on the portfolio and gives him the ability to take a long-term approach in investments.

“If you want to be a long-term investor in businesses, the challenge of managing a portfolio where money can come and might go is significant. Action can have a significant negative impact on one’s returns,” Ackman said.

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Morgan Stanley picks China stocks to ride out a worst-case scenario in U.S. tensions

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20 hours ago

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November 17, 2024

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Elon Musk endorses Trump’s transition co-chair Howard Lutnick for Treasury secretary

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1 day ago

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November 16, 2024

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Elon Musk at the tenth Breakthrough Prize ceremony held at the Academy Museum of Motion Pictures on April 13, 2024 in Los Angeles, California.

The Hollywood Reporter | The Hollywood Reporter | Getty Images

On Saturday, Elon Musk shared who he is endorsing for Treasury secretary on X, a cabinet position President-elect Donald Trump has yet to announce his preference to fill.

Musk wrote that Howard Lutnick, Trump-Vance transition co-chair and CEO and chairman of Cantor Fitzgerald, BGC Group and Newmark Group chairman, will “actually enact change.”

Lutnick and Key Square Group founder and CEO Scott Bessent are reportedly top picks to run the Treasury Department.

Musk, CEO of Tesla and SpaceX, also included his thoughts on Bessent in his post on X.

“My view fwiw is that Bessent is a business-as-usual choice,” he wrote.

“Business-as-usual is driving America bankrupt so we need change one way or another,” he added.

Musk also stated it would be “interesting to hear more people weigh in on this for @realDonaldTrump to consider feedback.”

Howard Lutnick, chairman and chief executive officer of Cantor Fitzgerald LP, left, and Elon Musk, chief executive officer of Tesla Inc., during a campaign event with former US President Donald Trump, not pictured, at Madison Square Garden in New York, US, on Sunday, Oct. 27, 2024.

Bloomberg | Bloomberg | Getty Images

In a statement to Politico, Trump transition spokesperson Karoline Leavitt made it clear that the president-elect has not made any decisions regarding the position of Treasury secretary.

“President-elect Trump is making decisions on who will serve in his second administration,” Leavitt said in a statement. “Those decisions will be announced when they are made.”

Both Lutnick and Bessent have close ties to Trump. Lutnick and Trump have known each other for decades, and the CEO has even hosted a fundraiser for the president-elect.

The Wall Street Journal also reported that Lutnick has already been helping Trump review candidates for cabinet positions in his administration.

On the other hand, Bessent was a key economic advisor to the president-elect during his 2024 campaign. Bessent also received an endorsement from Republican Senator Lindsey Graham of South Carolina, according to Semafor.

“He’s from South Carolina, I know him well, he’s highly qualified,” Graham said.

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Protecting your portfolio against risks tied to Trump’s tariff plan

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2 days ago

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November 16, 2024

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Biggest Risks After the Rally: Trade & Top Valuations

Money manager John Davi is positioning for challenges tied to President-elect Donald Trump’s tariff agenda.

Davi said he worries the new administration’s policies could be “very inflationary,” so he thinks it is important to choose investments carefully.

“Small-cap industrials make more sense than large-cap industrials,” the Astoria Portfolio Advisors CEO told CNBC’s “ETF Edge” this week.

Davi, who is also the firm’s chief investment officer, expects the red sweep will help push a pro-growth, pro-domestic policy agenda forward that will benefit small caps.

It appears Wall Street agrees so far. Since the presidential election, the Russell 2000 index, which tracks small-cap stocks, is up around 4% as of Friday’s close.

Davi, whose firm has $1.9 billion in assets under management, also likes staying domestic despite the tariff risks.

“We’re overweight the U.S. I think that’s the right playbook in the next few years until the midterms,” added Davi. “We have two years of where he [Trump] can control a lot of the narrative.”

But Davi plans to stay away from fixed income due to challenges tied to the growing budget deficit.

“Be careful if you own bonds for sure,” said Davi.

Since the election, the benchmark 10-year Treasury yield is up 3% as of Friday’s close.

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