Ackman's Pershing Square reaps $2.7 bln from rate trade but down 9% in 2022 -letter

Pershing Square Holdings

10/02/2023 14:04

By Nell Mackenzie
       LONDON, Feb 10 (Reuters) - Billionaire investor William
Ackman's Pershing Square fund reaped $2.7 billion on interest
rate trades in 2022, but not enough to plug losses and the fund
finished the year down almost 9%, according to an investor
presentation seen by Reuters.
    U.S. stock indexes had a dismal 2022 with the S&P 500
slumping almost 20%, as the Federal Reserve battled soaring
inflation with aggressive interest rate hikes that roiled
markets.
    Pershing Square Capital Management in 2022 lost 8.8% of its
net asset value its worst result since 2016, while its share
price fell 14.6%, the presentation dated Feb. 9 showed.
    The assets minus the liabilities in Ackman's fund trade at a
discount to its share price. The fund may consider moving its
listing from Europe to the United States to remedy this, a
Jefferies analyst note  JEF.N  said on Friday. 
    "It would likely offer a very good chance of materially
narrowing the discount, given the nexus for the fund and manager
has always been the U.S. anyway," said the Jefferies note. 
    "This possibility is also something that we do not feel is
currently reflected in PSH's share price," it said.      
    The contents of the presentation were reported by
Institutional Investor on Thursday. 
    Pershing Square traditionally holds a smaller number of
investments. Stock positions in companies such as Lowe's
 LOW.N , Netflix  NFLX.O , Chipotle Mexican Grill  CMG.N ,
Domino's Pizza  DBZ.N , Hilton  HLT.N  and Universal Music Group
 UMG.AS  detracted from positive performance elsewhere, the note
said.
    A performance fee was not charged by Pershing Square
Holdings in 2022, the presentation said. 
    Positions in Netflix and Domino's Pizza were sold in order
to free up capital for new opportunities, said the presentation.
    Interest rate protection in the form of derivatives known as
swaptions, a bet on volatility in rates markets, the fast food
company Restaurant Brands International, energy hedges and share
buybacks all retraced losses, the presentation said. 
    The interest rate hedges were initiated in late 2020 and
early 2021. In 2022 the fund entered new positions in long-term
interest rates, currencies and energy it said.
    The Fed raised rates from near zero in March to a range of
4.25%-4.5% last year, hiking rates by a further 25 basis points
last week.
    Pershing Square declined to comment. 
 (Reporting by Nell Mackenzie; editing by Dhara Ranasinghe and
Louise Heavens)
 ((Nell.Mackenzie@thomsonreuters.com;))