Big investor: Bill Ackman
Giles and Nick English grew up around aircraft. Their father was an ex-RAF pilot and flying is in their blood. Timepieces are too, with English senior often bringing home old clocks for his sons to tinker with and mend. In 2002, the brothers combined these two passions with the launch of Bremont, a company specialising in watches for pilots and the military. Today, Bremont timepieces sell for thousands of pounds and are worn not just by aircraft and defence personnel but also by wealthy civilians who enjoy the way the watches tick.
Bill Ackman is one such individual. He liked Bremont so much that he snapped up a multi-million pound stake in the business only last week. By any standards, Ackman is a wealthy man. With a personal fortune of more than $3 billion (£2.4 billion), the 56-year-old American investor does not need to work. But he does, running PERSHING SQUARE HOLDINGS, a UK-listed business that buys shares in large, stock market listed US and Canadian companies and holds them, generally for several years.
Many of these firms are household names, such as Universal Music, Hilton Hotels and restaurant chain Chipotle, and investments are limited to between nine and 12 at any given time. That means there is plenty of time to research new ideas thoroughly and monitor investments at close hand after buying the shares.
Ackman started his business in 2004 as a private fund for professional investors. In 2017, however, Pershing Square Holdings was listed in London, offering UK investors the chance to benefit from Ackman’s magic touch.
Today the shares are £28.95. They have risen since listing but the value of the group’s investments has increased even more, with the latest update from the company showing its assets valued at £44.12 a share. In other words, there is a 34 per cent discount between Pershing Square shares and the investments it owns.
By almost any measure, this discount suggests the shares are cheap, not helped because Federal law means that Ackman and his team cannot talk about Pershing Square to US investors, even though its investments are all North American.
Back in the day, Pershing was known for taking significant positions in failing businesses and pushing aggressively for change. The strategy notched up some big successes but it earned Ackman a reputation as a cage-rattler.
Recently, however, Pershing’s approach has shifted from pugilistic to paternal. Today, companies are as likely to welcome Ackman on their share register as they are to worry about his impact on their business. He still adopts an active investment stance but the strategy is more collaborative than confrontational, with board directors clocking that Pershing’s presence may well work wonders for their share price.
Holdings today include Burger King owner Restaurant Brands, DIY chain Lowe’s and Howard Hughes Corporation, which develops mini-cities, housing an average of 150,000 people each, with shops, restaurants, bars, cinemas, schools and churches thrown into the mix.
Some companies have been part of Pershing’s portfolio for years – others for much less time. In each case though, Ackman and his team sit down every week and debate whether the stocks still have potential or whether it is time to sell.
At times, they are ruthless, buying Netflix shares in January 2022 and selling out just three months later. In most cases however, the group sticks with its investments believing that they are resilient enough to pull through and thrive even if the US economy stumbles.
Taking a stake: Bill Ackman has backed Giles, left, and Nick English’s watch firm
Ackman does have another ace up his sleeve, using sophisticated financial instruments to bolster returns when times are tough. In February 2020, for instance, Pershing spent $27 million on credit default swaps – essentially betting that the world was about to become seriously worried about risky investments. The group sold them a few weeks later for more than $2.5 billion.
In 2021, when many economists were looking elsewhere, Ackman warned that inflation was about to rear its head. To hedge against it, Pershing invested in ‘swaptions’, a way of betting that US Treasury yields were about to rise. The strategy has delivered handsomely to date and continues to generate returns.
Pershing pays a quarterly dividend too – with 47.5 cents (38p) paid out in 2022 , declared in dollars but paid to UK investors in pounds and pence. An annual meeting on February 9 should give a flavour for the 2023 dividend, expected at close to 50 cents.
Midas verdict: Pershing Square Holdings is a FTSE 100 business, valued on the stock market at more than £7 billion. Yet it remains relatively unknown and the share price has suffered as a consequence. That should change. Ackman has proved his acumen over many years, he has spent more than £400 million of his own money on Pershing stock and may well have some ideas about how to give the share price a lift. At £28.95, the shares are a buy.
Traded on: Main market Ticker: PSH Contact: pershingsquareholdings.com or Camarco on 020 7357 4989
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