IPO flop gauges Bill Ackman’s personality discount
01/05/2026 14:44
The author is a Reuters Breakingviews columnist. The opinions expressed are his own. By Stephen Gandel NEW YORK, May 1 (Reuters Breakingviews) - Bill Ackman has repeatedly sought a deal commensurate with his own estimate of his worth. On Wednesday, he again came up short. Shares of the money manager's closed-end fund, Pershing Square USA, PSUS.N fell 18% on their debut. Even bigger and brasher listings could be in the offing later this year, ones that will lean just as heavily on personality to sell promises of astronomical profits later. The problem in this case is that investors seem to have valued predictability over persona. Like much of Wall Street, the 59-year-old billionaire has courted retail investors with a simple pitch: get returns generally reserved for the rarified world of “alternative assets,” in this case a high-flying hedge fund, but wrapped inside a product that looks and feels mainstream. Pulling that off requires financial engineering, long Ackman's specialty. To sweeten the pitch for IPO backers, Ackman threw in a slice of his management company, which also went public as part of the dual listing, and the fees it generates across all of its funds. He promoted the listing heavily through retail brokerage Robinhood, allowing minimum investments of just $250. The deal ultimately got done. But by the end of the first trading day, a $50 investment in Pershing Square USA through the IPO was worth $45.74, including the bonus shares. Reaching even that outcome required giving away about $725 million worth of the management company, based on trading prices on Thursday, effectively relinquishing some of the steady fee income that has fed high valuations for the likes of Blackstone. On Thursday, Ackman blamed the first-day drop on selling by the very retail investors he courted. Yet it comports with the common wisdom that predictability earns a premium, while volatility gets a discount. While the opinionated hedge-fund impresario has an enviable long‑term record, producing a 380% return over ten years as of the end of the first quarter, this comes with extreme swings. Pershing's fund rose 40% in 2014, only to drop 50% in six months in late 2015 and early 2016. In an age where retail investors are happy to award, say, Elon Musk’s Tesla an eye-popping valuation despite middling performance, the bet might well have been that they’d look past this wrinkle if a social-media-happy personality was attached. That appears to have been a miscalculation. Pershing Square USA still won a locked-up $5 billion haul to anchor investing plans. The management company plans to charge 2% annually on those assets, a prospect that helped lift its shares by 16% on Thursday. Some may doubt Ackman’s skill as an investor, but they seem to trust his ability to make money off those who do believe in him. Follow Stephen Gandel on LinkedIn and X. CONTEXT NEWS Bill Ackman's Pershing Square completed a dual IPO of a U.S.-listed closed-end fund and management firm on April 29. Bill Ackman's investment returns have been more volatile than the market https://www.reuters.com/graphics/BRV-BRV/BRV-BRV/byvrnnaawve/chart.png (Editing by Jonathan Guilford; Production by Pranav Kiran) ((For previous columns by the author, Reuters customers can click on GANDEL/ stephen.gandel@thomsonreuters.com))