Pershing Square Share Discussion Threads

[donald pond] 05/10/2023 15:14

Rambutan posted this last year:
AGT has just released its annual report, PSH remains its largest holding and on pg37-38 gets a small write up and estimate of the portfolio as at 30/09 (excluding derivs):

Universal Music Group 22.5%
Lowe’s 18.3%
Chipotle Mexican Grill 16.5%
Restaurant Brands 12.6%
Hilton 11.2%
Canadian Pacific Railway 9.9%
Howard Hughes 7.6%
Fannie Mae & Freddie Mac 1.5%

On UMG, Bill was quite bullish about the AI potential. He thinks UMG and Google can prosper. I'm not sure whether the model involves licensing artists to be used for AI purposes (like the Johnny Cash singing Barbie Girl thing). If I'm honest, I never really understand Bill's stock picks, but he tends to choose well on average.

[budd_foxx77] 05/10/2023 14:29

Ah OK, thanks for the reply. I didn't realise the second piece (the 2.9pc) was bought by a different entity.
I used to hold shares in PSH for a few years, have been out of it for a bit. Starting to think about buying back into it at some point. The portfolio is more concentrated than I thought, I actually can't think of any fund that is more concentrated. I don't have any great insight into UMG, one thing about UMG and some of the other holdings is they are trading on quite rich valuations just now (UMG at around 38x). And they're also consumer-orientated for the most part. Seems there is some debate around AI and how it's going to impact UMG's model. I guess all I'm saying is I don't fully understand why BA is so bullish on UMG with the stock trading at it's current level and with the difficulty in forecasting how AI is going to impact the business model/sector. I'm sure they have good reason for it but I would have to get comfortable with this b4 I can justify buying PSH.

[jellypbean] 05/10/2023 13:53

W.A. Ackman is listed as holding 10.23% of UMG as of 080623 (UMG website).

PSH originally bought 7.1%, PS V11 then bought 2.9%, so not much change since then unless PSH has sold to an Ackman affiliate (don't think so). PS V11 is an affiliate of PSH but not held within it.


7.1% of UMG would be c.3.34Bn USD.

PSH is 11Bn, so UMG is c. 30% of PSH.

UMG (in USD), was up 4.6% through Sept.

[budd_foxx77] 05/10/2023 13:12

does anyone know how much of UMG PSH owns? It looks like they don't break out the portfolio by MV on the interims. They bought 10% of UMG in 2021, I don't know if they sold any tho. And it doesn't show on the 13Fs. I found a news article which said they still had the 10%, if so I make that's about 36% of their equity portfolio. The next largest is CMG which is less than half of that.

[rickyl1] 05/10/2023 11:43

The hedge certainly seems to have taken the sting out of the downside. I hope we'll see a decent upturn if and when the market turns.

[jellypbean] 05/10/2023 11:27

USD NAV/Share down 1.4% during September. US 30 year yield went from 4.2% to 4.7%. SP500 down 4.9%. (CMG down 6.7%, HHH down 5.8% - LOW down 10%; didn't check the rest).

[jellypbean] 05/10/2023 10:51

I think the interest rate hedges are just hedges to protect the value of the portfolio against falls in the prices of the equity holdings that would be expected under conditions where the hedges pay off. I do think the weekly RNS NAV updates include the movements in the hedges, and the latest one showed slightly down on the most of the month. The gains are made by being able to reinvest the proceeds of the hedges when the equity values are depressed. A trawl back through the monthly accounting statements and transparency reports is why I believe this.

[donald pond] 05/10/2023 08:21

Fantastic call on treasuries by Bill. I'm surprised that NAV hasn't moved much given the asymmetric nature of his bets. Hoping that they have decided they can only be valued at cost until closed out. But there has been a movement of 10-20% in the underlying since it was opened (I don't think we know exactly when that was) and you would expect PSH to have leveraged that significantly

[riverman77] 04/10/2023 12:18

Perhaps UMG could make an offer for SONG - they have a good catalogue but disastrous management. I'm sure their songs would be much better off with UMG in charge.

[donald pond] 04/10/2023 10:21

UMG also looks good. Their roster of artists really is incredible, and the new venue at vegas suggests that live entertainment is only going to increase as a source of revenue for the biggest names

[williamcooper104] 04/10/2023 10:06

We will Looks like we've a hedge fund that's actually a hedge fund

[riverman77] 04/10/2023 09:03

Treasury yields still shooting up. Hard to know how he's structured the hedge, but I suspect if 10y yields get towards 5.5% we could see very healthy gains.

[rickyl1] 03/10/2023 17:21

Ah, of course. Thanks

[rambutan2] 03/10/2023 15:13

Good spot.
I think the resurrected SPAC/SPARC is the add.

[rickyl1] 03/10/2023 09:35

Noticed in the Sept. performance report that PSH now has 11 long positions, 1 more than August.

[donald pond] 29/9/2023 22:02

https://x.com/billackman/status/1707859617991008690?s=46&t=YfR7OyhMlqZLtI-h86iCxAInteresting

[donald pond] 29/9/2023 21:51

I agree with that view on Bill. If we could only get the macro without the stock picks. But I assume he is quite happy with the ability of the US consumer to withstand inflation. Also, while we think inflation is bad for stocks, that 1982-2000 period wasn't one of low inflation. But perhaps the truth is the Buffett measure that the stock market must ultimately reflect the size of the economy.

[srichardson8] 29/9/2023 19:33

Just remember old Salomon bond trader = clearly complicit criminal

[catabrit] 29/9/2023 14:42

I do not always like or understand his stock picks. I think on that front he is actually quite average. However, his ability to read the macro and get up to speed on it is second to none. Every time Bill has a macro bet on, or some sort of asymmetric short or hedge, I pay attention. He is seldom wrong.

I have been banging the drum about structural inflation and higher rates for longer for quite some time now. Ruffer and Horizon Kinetics have some good material on it and when you prise it apart, it’s quite logical and seems fairly likely.

Bill is right in that everyone thinks that inflation will mean revert but they forget that the structural forces are reversing and we are in fact mean reverting to the long term historical average which is higher.

There’s a fairly long and dense book about the history of interest rates compiled by an old Solomon bond trader. Typically the average is about 6%. What we’ve been through the last two decades is nothing sort of extraordinary and I think we should all be assuming 5-6% going forwards as a base case. Much higher than that, you probably want to go long bonds as there’s way too much debt for us to be able to service it at high single digit rates. It would likely break the entire financial system.

If you remember the old folk from the 80s and the 90s, they likely couldn’t get over rates declining because they were so accustomed to seeing high interest rates. They neglected to see the impact of technology, China and Russia opening up and the cheap resources and workforce that would provide. Everyone missed the structural forces at play.

The same is happening again.

Personally I see a lost decade or two for most US stocks from here.

[jellypbean] 29/9/2023 00:37

BA speaking today for 30 min. with CNBC. Covers a lot. Interest rate discussion starts at about 5 min. hxxps://m.youtube.com/watch?v=TrDI3QDFh0A

[rickyl1] 28/9/2023 21:15

He has stated that swaptions are being used to hedge. He thinks rates of 5.5% are where we should be heading so you'd imagine somewhere around there is his 'bet'.

[riverman77] 28/9/2023 18:07

They tend to put in place asymmetric hedges (such as put options), so you can see very big returns if they work out.

[jellypbean] 28/9/2023 17:25

I don't think the 30 year hedge is huge. Maybe about 0.5% of NAV (50M USD) for each 0.1% move in 30 year rates? It will be clearer when the September numbers are released.

[riverman77] 26/9/2023 11:58

The hedge must be doing well given sell off in treasuries.

[jellypbean] 22/9/2023 09:55

BA using Twitter/X to remind the world that PSH is still short 30 year treasuries.