Bill Ackman to Launch the Largest U.S. Closed-End Fund, Pershing Square USA Ltd
Bill Ackman, the renowned investor, is making a bold move to launch the largest U.S. closed-end fund ever, aiming to raise $10 billion or more. The planned fund, Pershing Square USA Ltd, is set to trade on the NYSE under the ticker PSUS.
The fund has a unique goal of holding 12 to 24 large-capitalization, investment-grade, free-cash-flow-generative North American durable growth companies. This strategy aligns with Ackman’s focus on long-term investments in solid companies with strong growth potential.
Challenges in the Closed-End Fund Market
Ackman faces a significant challenge due to the current state of the closed-end fund market, which is trading at a discount and has seen no new deals in 2023. This challenging market environment may impact the fund’s ability to attract investors initially.
However, Ackman’s strong track record and the performance of his existing fund, Pershing Square Holdings, give hope for potential success. Pershing Square Holdings, which has a market value of nearly $10 billion, has demonstrated notable past performances, even outperforming the S&P 500 in certain years.
Unique Aspects of Pershing Square USA Ltd
A unique aspect of the planned fund is that it will not include a performance fee, deviating from the industry norm where U.S. funds often have performance fees tied to benchmark outperformance. This decision could potentially attract investors who are seeking a different fee structure.
However, Ackman’s new fund will also face competition from his existing Pershing Square Holdings, which is subject to location and tax disadvantages for U.S. investors. This could influence investors’ decision-making process when considering their investment options.
Ackman’s Confidence in Overcoming Market Barriers
Ackman’s bold initiative to create the largest U.S. closed-end fund despite the challenging market environment and competition from discounted existing funds showcases his confidence in overcoming market barriers through his investing strategies and market appeal. This move by Ackman will undoubtedly attract attention from investors and industry experts as they watch the progress of Pershing Square USA Ltd and its potential impact on the closed-end fund market.
Analyst comment
Positive news: Bill Ackman is launching the largest U.S. closed-end fund, Pershing Square USA Ltd, aiming to raise $10 billion or more.
Market outlook: Despite the challenges in the closed-end fund market, Ackman’s strong track record and the performance of his existing fund give hope for potential success. The unique goal, lack of performance fee, and confidence in overcoming market barriers make it attractive to investors. It will likely attract attention from investors and industry experts and potentially impact the closed-end fund market.
