Pershing Square Holdings, Ltd. ($PSHZF) operates as an investment holding company based in Guernsey, structured as a closed-ended fund. The company primarily focuses on acquiring and maintaining positions in a select group of large-capitalization companies. Its core investment objective is to safeguard capital while pursuing substantial, long-term capital growth within a reasonable risk framework.
Pershing Square Holdings predominantly allocates funds to large-capitalization securities that exhibit high liquidity under typical market conditions. In addition, the company may consider investments in the debt securities of private companies, provided there is an observable market price for these debt instruments. The investment portfolio may encompass both long and short positions in equity or debt securities from issuers within and outside the United States.
Pershing Square Holdings may also venture into distressed securities, rights, options, warrants, bonds, notes, and equity and debt indices. Furthermore, it actively explores investments in swaps, swaptions, and various other derivatives. The company’s investment manager is Pershing Square Capital Management, L.P.
Bill Ackman’s Pershing Square Follows Hedge Fund Rush to AI
Bill Ackman’s Pershing Square hedge fund has taken steps to increase its stake in Alphabet Inc. (GOOG) (GOOGL) while reducing its holdings in Lowe’s (LOWE) and Chipotle (CMG).
In the latest 13F filing, Ackman’s firm appears to be pursuing a strategy akin to that of fellow billionaire hedge fund manager Dan Loeb, by trimming positions in defensive inflation-related investments in favor of investments in artificial intelligence.
Pershing Square augmented its holdings by approximately 1.3 million Alphabet shares, resulting in a stake valued at $1.1 billion. Simultaneously, the fund scaled back its position in Lowe’s by 25%, equivalent to roughly $1.6 billion. It also reduced its investments in Chipotle and Restaurant Brands International (QSR).
Both investors seem to view the recent decline in inflation expectations as an opportune time to reduce their exposure to defensive inflation-linked assets. However, it’s worth noting that Ackman’s three largest positions are concentrated in consumer-driven stocks, and he has been relatively less vocal about artificial intelligence compared to Loeb.
Despite this strategic shift, Ackman remains convinced of a scenario involving “persistent inflation” at around 3%, as opposed to the Federal Reserve’s 2% target. He has made clear his position, stating that he is “short in size” in the U.S. 30-Year Treasury market.
In a tweet on August 2nd, he shared his perspective, saying, “The best hedges are the ones you would invest in anyway, even if you didn’t need the hedge. This fits that bill, and also I think we need the hedge.”
It’s worth noting that Ackman’s stance faced criticism from economist David Rosenberg, who contended, “If the San Fran Fed’s research report on CPI rents is anywhere near the ballpark, headline inflation in a year will melt to 0.5% and to 1.4% for the core.”
Hedge fund manager Bill Ackman sees U.S. long-term rates rising
Renowned billionaire investor Bill Ackman expressed his belief that 30-year interest rates will continue to climb. Meanwhile, his hedge fund, Pershing Square Capital Management, maintains a short position on bonds, driven by his anticipation of persistent high inflation.
These remarks followed the U.S. Federal Reserve’s decision to keep interest rates steady while adopting a more hawkish monetary policy stance, which many officials believe can effectively combat inflation without causing economic disruption or substantial job losses.
Ackman conveyed his skepticism, stating, “The long-term inflation rate is not reverting to 2%, no matter how many times Chairman Powell reiterates it as his target.” He shared these thoughts on the social media platform X (formerly known as Twitter).
Pointing to potential wage increases due to ongoing autoworker strikes, Ackman highlighted inflationary pressure. He noted, “The long-term deflationary effects of outsourcing production to China have dissipated. Workers and unions now possess more bargaining power.”
Additionally, he underscored the influence of escalating energy prices in the inflation landscape.
The updated quarterly projections released by the U.S. central bank suggest that the Fed’s benchmark overnight interest rate may experience one more hike this year, reaching a range of 5.50% to 5.75%. Furthermore, the projections indicate that rates will remain notably higher through 2024 compared to previous expectations.
Ackman supported his outlook by stating, “The long-term inflation rate, in addition to the real rate of interest and the term premium, suggests that a 5.5% yield for 30-year Treasuries is appropriate.” He expressed surprise at the relatively low long-term interest rates.
The yield on U.S. 30-year treasuries climbed to 4.55% on Thursday, marking its highest level since January 2011.
How Do I Buy Pershing Square Holdings Shares?
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What Kind of Stock is Pershing Square Holdings?
Pershing Square Holdings is presently categorized as a “Turnaround” based on a comprehensive evaluation of its quality, value, and momentum. This classification is determined by a composite score that takes into account various fundamental and technical indicators.
Stocks are classified along a spectrum that includes categories such as “Super Stocks,” “High Flyers,” “Contrarians,” “Turnarounds,” “Neutral,” “Value Traps,” “Momentum Traps,” “Falling Stars,” and “Sucker Stocks.”
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