Pershing Square: a deeply undervalued investment trust to buy now

Pershing Square Holdings has a strong record, but trades at a discount of almost 30%. It could be the ideal investment for uncertain market conditions, says Max King.

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The ideal investment for uncertain market conditions would be a trust with a great performance record and a strong chance of preserving value in a bear market, yet one whose shares trade at a significant discount to net asset value (NAV). That’s a lot to ask for. Trusts usually have to sacrifice upside to protect the downside and the successful ones trade close to or above net asset value.

Yet Pershing Square Holdings (LSE: PSH), the £5bn fund lead-managed by Bill Ackman, trades on a discount of nearly 30% despite having returned 70% last year. First listed in Amsterdam in 2014, it switched to London last year. Though classified as a hedge fund, the fund hasn’t shorted any investment since 2017. Instead, it runs a highly concentrated portfolio of companies, mostly in the US, and often seeks to influence their management. The top five holdings typically account for over 60% of the portfolio and the top ten for 80%.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.