Billionaire Bill Ackman has more than doubled his net worth by selling 10% of his hedge fund Pershing Square Capital Management to a group of investors for $1.05 billion. Ackman, who still owns about half the firm, now has an estimated net worth of $9.2 billion. The consortium of investors includes family offices, institutions like Arch Capital Group and Iconiq Investment Management, and Israeli insurance company Menora Mivtachim.
The deal is seen as a precursor to Pershing Square going public by late 2025 or early 2026. The firm currently manages $16.3 billion in assets, with the recent valuation representing 64% of its assets under management. Pershing Square earned $155 million in management fees and $312 million in performance fees in 2023, charging a 1.5% annual management fee and 16% performance fees on profits.
Pershing Square has sold investors on its higher valuation by emphasizing its permanent capital structure, high margins, and the expected launch of a U.S.-listed closed-end fund for retail investors this summer. The firm’s performance in recent years has been impressive, with a five-year compound annual return of 31%, outperforming the S&P 500 Index’s 14% annualized return. The firm holds large positions in stocks like Chipotle, Alphabet, and Hilton, as well as making macro bets, including credit hedges.
One of the key factors in Pershing Square’s growth prospects is Bill Ackman’s own celebrity status. Ackman has leveraged social media to cultivate a large following and has been outspoken on political and social issues. Investors may be willing to pay a premium for high-profile personalities, as evidenced by Donald Trump’s fortune largely coming from stock in his social media network’s parent company. Pershing is banking on Ackman’s stature to attract more assets and fees.
The $1.05 billion in funding will primarily be invested in Pershing Square USA and other funds, benefiting all of the firm’s employee owners, including Ackman’s chief investment officer, Ryan Israel. Israel, who made Forbes’ 30 Under 30 finance list in 2015, has been with Pershing since 2009 and was named Ackman’s designated successor in 2022. While the firm may not agree on all matters, such as the U.S. presidential election, they are aligned on their long-term mission of driving value for investors.
The future looks promising for Pershing Square as it aims to capitalize on Ackman’s celebrity status, high performance track record, and the launch of new funds. The firm’s focus on a permanent capital structure and its ability to attract world-class investors bode well for its growth and success in the years to come. Ackman’s influence and the firm’s strategic initiatives position Pershing Square as a force to be reckoned with in the hedge fund industry.
