Ackman has had a great record over the past seven years. Now he's making it easier for U.S. investors to buy in. They should be wary. Ackman has had a great record over the past seven years. Now he's making it easier for U.S. investors to buy in. Should they? By Andrew Bary
After failing to pull off a U.S. fund offering in 2024, billionaire investor Bill Ackman is taking a little advice from Mary Poppins to help the medicine go down -- he's adding a little sugar via stock in his management company, Pershing Square Inc. While the terms are superior to what Ackman offered two years ago, investors may want to think twice before participating.
Here's the deal: Both the fund and management company could come public in a rare twin initial public offering by the end of March. The closed-end fund, Pershing Square USA, could raise $5 billion to $10 billion, and Ackman already has lined up $2.8 billion from a group of investors, who will get a sweeter deal than public buyers.
Ackman plans to offer Pershing Square USA shares at $50 each, while Pershing Square Inc. will go public by distributing what could be 40 million shares to buyers of Pershing Square USA, in what amounts to a direct offering rather than a traditional IPO. For every 100 shares of Pershing Square USA purchased, a buyer will get 20 shares of Pershing Square Inc.
Barron's estimates this could amount to a 10% bonus. Pershing Square Inc. could be valued at about $10 billion, in line with its valuation when Ackman sold a 10% stake privately to a group of investors in 2024. The management company should have about 400 million shares outstanding.
The environment isn't great for bringing public both a new fund and an alternative asset manager. There has been a collapse in the stock price of marquee alt firms like Blackstone and KKR. Ackman, 59, isn't deterred by the market turmoil, telling potential investors in a letter that "the greater the stock market disruption, the better for Pershing Square USA's acquisition program."
Pershing Square USA is a closed-end fund. That means it issues a fixed amount of shares, which then trade like stocks or exchange-traded funds. Investors cannot redeem their shares from Pershing Square. Their only liquidity is in the open market.
Closed-end funds can trade at a premium or discount to their net asset value. Unfortunately, U.S. equity closed-end funds usually trade at discounts ranging from 5% to more than 10%. The closed-end IPO market has been moribund, with minimal new issuance in two years, because investors don't like the fund structure and the tendency of funds to trade at discounts. Ackman failed to take Pershing Square USA public in 2024 because buyers were worried the fund would immediately trade at a discount, resulting in losses on their investment.
Ackman vowed to resurrect the deal. His solution is to offer free shares of his management company as an incentive to buy Pershing Square USA so that investors are compensated for the risk that the closed-end fund moves to a discounted price. "We are giving you 'bonus' shares in PSI to thank you for your investment in PSUS, our first U.S.-listed investment fund, and because doing so makes good business sense," he wrote.
Should investors take up Ackman's offer on the new fund? The terms are certainly superior to what they were two years ago. Ackman also has had a great record over the past seven years. He plans to run a concentrated portfolio of 12 to 15 of what the prospectus calls undervalued "large-capitalization growth companies." Ackman may also make macro bets involving bonds, currencies, or commodities. Based on Ackman's existing investments, Pershing Square USA could contain Alphabet, Meta Platforms, Amazon.com, Uber Technologies, Brookfield, and Restaurant Brands International. It will be his first U.S.-listed fund and trade on the New York Stock Exchange.
Here are some of the problems. While Pershing Square USA could begin trading at a discount to its net asset value, shares of Ackman's management company are supposed to offset those losses. The value of the bonus stock, however, is unclear. The fund will have a stiff annual fee of 2%, creating a hurdle for Ackman to beat the S&P 500 index and low-fee ETFs. Ackman's management company is small relative to its many alt peers. It now runs about $16 billion in fee-paying fund assets. Even assuming a successful fund offering, the total would be $25 billion. Pershing Square might struggle to hold a $10 billion market value in that scenario, since that likely would be a big premium to peers based on revenue, earnings, and assets.
What's more, investors have a ready alternative to the fund IPO. That comes in the form of Ackman's main existing investment vehicle, Pershing Square Holdings, a $13 billion European-listed closed-end fund that trades in London and lightly in the U.S. under the ticker PSHZF. That fund is off to a tough start in 2026 -- it's down 14% this year through March 10 based on its net asset value, against a drop of less than 1% for the S&P 500 -- after topping the benchmark index by about three percentage points in 2025. The fund has consistently traded at a 20%-plus discount to net asset value in recent years, and investors can buy it at a recent 23% discount to its NAV.
The European fund is taxed as a passive foreign investment company. Many U.S. investors avoid such funds because they see the tax treatment as onerous, says tax expert Robert Willens, but he doesn't see it as a big negative. Investors buy master limited partnerships, and their tax treatment can be similar, he says.
Ultimately, the offering is a complex way for Ackman to reach U.S. investors and boost Pershing Square Inc.'s assets under management. Despite the bonus shares, investors are better off with the European shares -- or simply waiting until the U.S. fund is trading at a potential discount before buying in.
Write to Andrew Bary at andrew.bary@barrons.com
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March 13, 2026 21:30 ET (01:30 GMT)
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