Andrew Bary
Bill Ackman is off to a rocky start in 2026, with his main investment vehicle down 11% as he readies a potential public offering of his management company and a new closed-end equity fund.
Pershing Square Holdings, a European-listed closed-end fund that accounts for the bulk of Ackman's assets under management, was down 11.1% year-to-date through Feb. 24, against a nearly 1% positive total return for the S&P 500 index.
The weak showing reflects declines in some of the concentrated fund's key investments, including Fannie Mae, Uber Technologies, Amazon.com and Howard Hughes Holdings. The fund, traded in London and lightly in the US under ticker PSHZF, reports its returns weekly. The U.S.-listed shares trade around $57.
The fund has about $13 billion of net assets and accounts for the bulk of Pershing Square Capital Management's total assets under management of around $20 billion.
The weak showing for the fund so far this year could make it harder for Ackman to achieve the lofty valuation that he is reportedly seeking for his now-private management company, Pershing Square Capital Management.
Ackman sold a 10% stake in the business to a group of investors at a $10.5 billion valuation in 2024. The Wall Street Journal reported in late 2025 that he could seek a valuation "well over" that level in a 2026 public offering.
The Journal also reported that Pershing Square would give equity in the management company to buyers of a closed-end fund, Pershing Square USA, as an inducement. The two offerings could come at the same time, the Journal said.
It has been very difficult to market new closed-end funds. Ackman tried and failed to take Pershing Square USA public in 2024 due to insufficient demand.
There have been no fresh filings yet for the management company or the closed-end fund.
The performance of the existing Pershing Square closed-end fund could mean little or no incentive fee income this year for Ackman's management company if returns don't reverse meaningfully. That cloudy outlook could negatively affect the valuation of the management company if it goes public. Given its concentrated investments and financial leverage, the fund can see its performance change quickly.
The Pershing Square fund charges a 1.5% base annual management fee and an annual incentive fee of 16%, subject to certain adjustments.
Last year, the incentive fees dominated: They totaled $489 million, versus $208 million in base fees, according to the fund's annual report. The fund generated the sizable incentive fee in 2025 because it gained 20.9% net of fees, about three percentage points above the S&P 500. The fund has delivered strong performance over the past seven years.
Other negatives for the valuation of Ackman's management company include the sharp drop this year in shares of alternative-asset managers such as Blackstone, KKR, and Ares Management, as well as the recent stock-price decline in Howard Hughes.
Ackman's firm now controls about half of Howard Hughes, a real estate company, after buying additional shares in 2025. Ackman is trying to transform it into a mini Berkshire Hathaway, through the recent purchase of property-and casualty-insurer Vantage Group. Ackman plans to diversify the insurer's bond-dominated investment portfolio into more equity-type investments.
Ackman's firm gets paid a small percentage of the increase in Howard Hughes market value -- now around $4 billion -- above a certain level. Howard Hughes stock is down about 9% this year to $72 after falling recently amid disappointment with its real-estate earnings outlook for 2025.
Then there is key man risk with the management firm. Ackman, 59, is a celebrity investor with two million followers on X who is the face of his firm. Other alt managers aren't as dependent on their leader.
If Ackman seeks a valuation of $15 billion or more for his management company, that would be a rich price relative to the base fee of Pershing Square Holdings, its assets now of around $20 billion and those of other alternative managers. Alternative asset managers often are valued at 5% to 15% of assets. Pershing Square appears set to seek a much higher multiple.
A wildcard is the success of the new closed-end fund, which, if successful, would add meaningfully to the firm's assets under management. If Ackman raises $5 billion, as some media reports last year suggested, the firm would oversee about $25 billion. Even at a sub-$15 billion market value, that would imply a high valuation relative to assets.
A positive for the management company's valuation is a small employee base of around 50, which likely supports high margins. Last year, 14 key people at Pershing Square shared $429 million in fees generated by the European closed-end fund, or an average of about $30 million each, according to the annual report.
Ackman controls the European fund with an ownership stake of more than 20%.
It is tough to bring a new closed-end fund to market since many trade at discounts to net asset value, including Pershing Square Holdings, whose shares recently traded at about a 25% discount to NAV.
Pershing Square will need to convince investors that the new fund -- which may have similar investments to the existing one -- is superior to the existing fund available at a big discount.
Write to Andrew Bary at andrew.bary@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 02, 2026 15:11 ET (20:11 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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