Nevertheless, it is no coincidence that Pershing Square ranked among the most heavily bought investment companies on leading UK share-dealing websites in February and March.
Increased investor interest has begun to narrow what was an anomalously wide discount on the shares. At the end of October these traded 36pc below the value of the fund’s investments but now stand merely 26pc below, a big gain for Ackman and his colleagues who own 27pc.
This huge valuation gap is roughly double the average investment company discount. It reflects investor unhappiness with Pershing Square’s high charges which see Ackman’s firm Pershing Square Capital Management earn a 1.5pc annual management fee and an “incentive” fee of 16pc of all investment gains.
These fees generated $467.5m (£370.8m) for the managers last year and saddled Pershing Square with total costs of 6pc, according to its key information document.
While disclosure rules inflate investment company costs a bit, Pershing Square’s are very high compared to other funds.
Ackman’s fame could offer a solution, however. In February, he announced plans to launch a new fund, Pershing Square USA. A fifth of the fees his firm earns will be offset against the performance fee paid by Pershing Square.
If the new fund raises $10bn it will knock $40m off the London fund’s costs. If it raises more, the windfall for Pershing Square investors will be bigger, although it may have to be very large to completely offset what were $312m of performance fees last year.
With the fund performing so well and delivering strong returns after all costs, we are happy to remain holders, but will look out for any signs the fund manager is taking his eyes off the ball or a widening in the discount.
Questor says: Hold
Ticker : PSH.L
Share price: £40.58.
Read the latest Questor column on telegraph.co.uk every Sunday, Monday, Tuesday, Wednesday and Thursday from 8pm.
Read Questor’s rules of investment before you follow our tips.
