Key Takeaways
- • Citi initiated coverage of Pershing Square with a "Buy" rating and a $50 price target, implying potential upside of more than 40% from the stock's level at the time of the call.
- • Citi cited Pershing Square's 98% permanent capital base as a key support for the rating, according to the headlines of the coverage.
- • Bill Ackman publicly called the trailing share price of his newer vehicle, Pershing Square USA, "frankly absurd" after its portfolio lagged the broader market.
- • Pershing Square USA withdrew a planned initial public offering after failing to secure sufficient investor backing, according to reports.
- • Pershing Square Holdings has been trading at a discount of more than 30% to its net asset value, per a separate market report.
Summary
Citi has initiated coverage of Bill Ackman's Pershing Square with a "Buy" rating and a $50 price target, a call that implies potential upside of more than 40% from the stock's level at the time of the report. According to coverage of the initiation, Citi pointed to the firm's 98% permanent capital base as a central element of its thesis. Permanent capital, which is not subject to redemption pressure from investors, gives a vehicle like Pershing Square flexibility to hold concentrated positions over long periods, a feature analysts often weigh when assessing listed investment companies.
The rating comes amid a difficult stretch for Ackman's listed vehicles. Pershing Square Holdings has reportedly traded at a discount of more than 30% to net asset value, even as Ackman's broader investment track record has been strong over the past 15 months, according to a market report. Separately, Ackman has described the slumping share price of Pershing Square USA, his newer fund, as "frankly absurd," after the portfolio trailed the broader market. Media reports also indicate that Pershing Square USA has withdrawn a planned initial public offering after struggling to secure investor backing, a development that highlights investor skepticism toward the vehicle's valuation.
Citi's initiation therefore places a sell-side endorsement on a stock that has been trading well below what the bank views as fair value. For allocators tracking listed alternative managers and closed-end-style vehicles, the call underscores the gap that can open between a vehicle's portfolio performance and its market price, and how permanent capital structures may be valued differently by the market. The source material available for this report does not include Citi's full valuation methodology or the specific analyst who authored the note.
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The rating comes amid a difficult stretch for Ackman's listed vehicles. Pershing Square Holdings has reportedly traded at a discount of more than 30% to net asset value, even as Ackman's broader investment track record has been strong over the past 15 months, according to a market report. Separately, Ackman has described the slumping share price of Pershing Square USA, his newer fund, as "frankly absurd," after the portfolio trailed the broader market. Media reports also indicate that Pershing Square USA has withdrawn a planned initial public offering after struggling to secure investor backing, a development that highlights investor skepticism toward the vehicle's valuation.
Citi's initiation therefore places a sell-side endorsement on a stock that has been trading well below what the bank views as fair value. For allocators tracking listed alternative managers and closed-end-style vehicles, the call underscores the gap that can open between a vehicle's portfolio performance and its market price, and how permanent capital structures may be valued differently by the market. The source material available for this report does not include Citi's full valuation methodology or the specific analyst who authored the note.
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