Pershing Square Capital Management, L.P.
Hedge fund management company Pershing Square Capital Management is probably most known for its founder, activist investor Bill Ackman and his controversial positions in such companies as Herbalife and Wendy’s. The firm currently oversees three funds that have billions of dollars within them.
The firm's client base is made up entirely of pooled investment vehicles with almost $17 billion in assets under management.
Pershing Square Capital Management Background
Bill Ackman founded the firm in 2004 with $54 million of his and former business partner Leucadia National’s money. In its first 10 years, the New York firm delivered $11.6 billion in gains. Today, it employs a group of advisors who oversee its funds' management. Now a billionaire, according to Forbes, Ackman is the majority owner.
Pershing Square Capital Management Client Types and Minimum Account Sizes
The firm describes its investors as high-net-worth individuals, pension funds, profit-sharing plans, trusts, estates, charitable organizations, corporations, business entities, endowments and foreign sovereign wealth funds. That said, one of its funds, Pershing Square Holdings (ticker: PSHZF) is a public fund, whose shares can be bought over the counter from a broker-dealer.
Pershing Square Capital provides its minimum subscriptions in each private fund’s offering documents.
Services Offered by Pershing Square Capital Management
As mentioned earlier, Pershing Square Capital manages hedge funds - two of which are private, while one is public. Private funds Pershing Square, L.P. and Pershing Square International, Ltd. generally have the same strategies and objectives as Pershing Square Holdings, Ltd., the public fund. The firm is not actively seeking new investors for its two private funds.
At times, the firm may also provide investment advisory or management services to other funds or products.
Pershing Square Capital Management Investing Philosophy
Ackman considers Warren Buffet a mentor and accordingly looks for solid companies with large growth potential. So with Pershing Square, Pershing Square International and Pershing Square Holdings (collectively, the core funds), he seeks to invest in typically eight to 12 core investments. More specifically, he looks for minority stakes in publicly traded companies. He does this because he believes, as stated in the firm’s Form ADV brochure:
- "There are a limited number of attractive investments available in the marketplace at any one time."
- "Investing in a relatively modest number of attractive investments about which it has detailed knowledge provides a better opportunity to deliver superior risk-adjusted returns when compared with a large diversified portfolio of investments it can know less well."
The firm generally sets no restrictions on the securities or other financial instruments it uses. It also does not follow any set asset allocation model.
Fees Under Pershing Square Capital Management
Pershing Square Capital bases its management fees that it takes from its funds based on a percentage of assets under management. Generally, the percentage is 1.5% annually for the core funds. On top of that, the firm collects a performance-based fee, which generally starts at 20% of the increase in net asset value (after the management fee and other losses have been deducted). The firm may negotiate any fees at its discretion.
What to Watch Out For
In its most recent SEC filings, Pershing Square Capital reported that it has two disclosures. The most recent one (resolved in January 2017) involved an employee’s $500 personal contribution to a political campaign that was in violation of SEC rules. The contribution was returned and the firm, without admitting to the allegations, consented to a cease and desist order and a censure, and paid a $75,000 civil penalty.
The other disclosure goes back to 2010, when the firm bought a 13.9% stake in a Brazilian shopping mall development company and did not immediately notify the parent company that was preparing for an IPO, which is required by the Brazilian SEC. Pershing Square Capital sent a formal letter a little more than a month after its purchase. Without admitting to a violation, which the Brazilian SEC never determined, the firm agreed to pay a $49,000 fine.
Opening an Account With Pershing Square Capital Management
To contact Pershing Square Capital, call (212) 813-3700. To find out more about Pershing Square Holdings, email IR-PershingSquareHoldings@camarco.co.uk.
All information is accurate as of the writing of this article.
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