Pershing Square’s Bet on Itself: A Strategy to Unlock Value

LONDON, UK – December 10, 2025 – In a financial maneuver that speaks volumes, Pershing Square Holdings, Ltd. (PSH), the investment vehicle led by activist investor Bill Ackman, has once again stepped into the market to purchase its own shares. The company announced yesterday that on December 9, it repurchased 30,287 of its public shares at an average price of $66.99. While a share buyback might seem like a routine corporate action, for PSH, it represents a critical tool in a long-term battle to align its market price with what management believes is its true underlying worth.

This transaction is more than just a line item in a financial report; it's a powerful signal of confidence and a strategic move designed to directly benefit its investors. At a time when organizations are constantly evaluated on how they create and sustain value, PSH's approach offers a compelling case study in capital allocation. By systematically buying back its own stock at a significant discount, the fund is making a tangible bet on its own portfolio and providing a direct, accretive return to its remaining shareholders. This move highlights an innovative strategy at the intersection of market dynamics and shareholder stewardship.

Understanding the Value Gap

To grasp the significance of Pershing Square's actions, one must first understand its structure as a closed-ended fund. Unlike open-ended mutual funds, which create or redeem shares daily based on investor demand, a closed-ended fund like PSH has a fixed number of shares that trade on a stock exchange, just like a regular company. The fund's intrinsic value is represented by its Net Asset Value (NAV), which is the total market value of all the investments in its portfolio, minus liabilities, divided by the number of shares.

Ideally, a fund's share price would trade close to its NAV. However, for various reasons including market sentiment and perceived liquidity, a closed-ended fund's shares can trade at a price significantly different from their NAV—either at a premium or, more commonly, a discount. For PSH, this discount has been a persistent and sometimes frustrating feature. As of November 30, 2025, the fund's reported NAV per share was $87.20. The recent buyback at an average price of $66.99 represents a purchase at a staggering 23% discount to that value.

Historically, this gap has been even wider, reaching as high as 40% in recent years. This means an investor could buy a share of PSH on the open market for a fraction of the price of the underlying assets it represents. While this presents a potential bargain for new investors, it's a source of concern for the fund's management and long-term shareholders, as it suggests the market is undervaluing the company's high-conviction, concentrated investment portfolio.

The Buyback as a Strategic Weapon

Confronted with this persistent discount, PSH has deployed the share buyback as one of its primary strategic weapons. The logic is both simple and powerful. When the fund repurchases its shares at a price below their NAV, it is effectively buying a dollar's worth of assets for less than a dollar. This transaction is immediately "accretive," meaning it increases the NAV per share for all the remaining shareholders. The pool of assets remains largely the same, but it is now divided among fewer outstanding shares, making each remaining share intrinsically more valuable.

This latest purchase is not an isolated event but part of a disciplined, ongoing capital allocation strategy. It falls under a new $100 million share repurchase program announced in November 2025. This follows years of similar actions; since 2017, PSH has spent approximately $1.7 billion to repurchase over 72 million of its shares. Management has been clear that it views these buybacks as an opportunistic and highly attractive investment, particularly when the discount is wide and it believes its own portfolio companies are themselves undervalued.

This approach serves a dual purpose. First, it provides a direct and transparently profitable return for shareholders. Second, it sends an unambiguous message to the market: management believes its own stock is one of the best investments available. This act of self-investment can help bolster investor confidence and, over time, contribute to narrowing the very discount it seeks to exploit.

The Treasury Share Decision and Future Flexibility

An important technical detail of PSH's strategy is its decision to hold the repurchased shares "in Treasury" rather than canceling them. When shares are held in treasury, they are removed from the count of outstanding shares, which boosts key metrics like Earnings Per Share (EPS). However, they remain on the company's books as an asset that can be reissued later.

This provides significant strategic flexibility. Should PSH identify a major new investment opportunity or need capital for other corporate purposes, it could sell these treasury shares back into the market. This avoids the time and expense of issuing entirely new shares and prevents dilution for existing shareholders at an inopportune time. By holding shares in treasury, PSH maintains a ready source of capital while simultaneously executing its strategy to enhance current shareholder value.

This careful management of its capital structure reflects a sophisticated approach to corporate finance, balancing immediate shareholder returns with long-term operational readiness. It demonstrates a commitment not just to picking winning stocks for its portfolio, but to actively managing its own corporate structure for the benefit of its owners.

A Broader Commitment to Shareholder Value

While the buyback program is a cornerstone of its strategy, it is part of a multi-faceted effort by PSH to address the NAV discount and maximize long-term growth. Over the years, the fund has taken other significant steps, including elevating its listing to the prestigious FTSE 100 index on the London Stock Exchange to increase its visibility and investor base. The company also initiated and has since increased a quarterly dividend, providing a direct cash return to investors.

These actions, taken together, paint a picture of a management team actively engaged in creative and disciplined stewardship. For the thousands of individuals, pension funds, and endowments invested in Pershing Square Holdings, these strategies are not just abstract financial engineering. They represent a tangible effort to ensure that the market price of their investment accurately reflects its true worth. In a complex financial world, this commitment to closing the value gap is a powerful form of progress for the people who have entrusted the fund with their capital.