Billionaire Bill Ackman more than doubled his net worth Monday by selling 10% of his hedge fund Pershing Square Capital Management to a consortium of investors for $1.05 billion, cashing in on his rising fame and a planned launch this summer of a U.S.-listed closed-end fund.
Ackman still owns about half the firm, so the steep $10.5 billion valuation makes his stake now worth around $5.25 billion, putting his total net worth at an estimated $9.2 billion. A person familiar with the firm confirmed that chief investment officer Ryan Israel, who made Forbes’ 30 Under 30 list in the finance category in 2015, owns a nearly 10% stake, which also pushes his net worth to more than $1 billion.
The press release announcing the deal says the group of investors includes family offices and institutions including publicly-traded insurer Arch Capital Group, Iconiq Investment Management and Israeli insurance company Menora Mivtachim. The Wall Street Journal first reported the deal was close to being finalized last week and cited it as a precursor to a plan to take Pershing Square public in late 2025 or early 2026.
“We are delighted to invite a group of world-class, long-term partners as investors in our business, which has been entirely owned by Pershing Square employees since our inception more than 20 years ago,” Ackman said in Monday’s release. “This new investment will help accelerate our growth in assets under management in existing and new strategies.”
Pershing Square managed $16.3 billion in assets as of the end of April, meaning its valuation amounts to 64% of its assets under management, and its annual report says it earned $155 million in management fees and $312 million in performance fees in 2023. The firm charges a 1.5% annual management fee and 16% performance fees on profits. Publicly-traded alternative investment firms typically trade at much lower multiples relative to their assets managed and fee revenues—giant private equity firms like Blackstone, KKR and Apollo are worth 13% to 15% of their assets under management at current prices.
Pershing sold investors on the higher valuation by pitching its permanent capital structure, high margins with a lean staff of only 41 employees and the expected launch this summer of a U.S.-listed closed-end fund for retail investors, Pershing Square USA. Most of the firm’s assets now are held in a closed-end fund listed in London and Amsterdam. This structure makes the firm’s capital base more stable, with investors trading shares of the fund on the open market instead of being able to withdraw their capital. Other firms with primarily permanent capital structures include credit manager Blue Owl Capital, which manages $174 billion and has a market cap of $25 billion.
Pershing’s performance has impressed in recent years after losing billions in the mid-2010s on Valeant Pharmaceuticals and a short bet against Herbalife. Its five-year compound annual return through the end of 2023 was 31%, significantly outperforming the S&P 500 Index’s 14% annualized return in that span. Its concentrated stock portfolio has large positions in stocks like Chipotle, Alphabet and Hilton, and the firm also makes macro bets, including credit hedges that earned billions in March 2020 when the market tanked.
But the most important factor of all to its growth prospects may be Ackman’s own celebrity. While he has backed off activist campaigns in his portfolio companies, Ackman has leveraged the social media platform X to cultivate a growing audience of 1.2 million followers and become outspoken on political and social issues. He was the loudest voice in the campaign to oust Harvard president Claudine Gay before her January 2024 resignation amid accusations of plagiarism and a weak response to antisemitic incidents on campus. He is also a frequent critic of President Joe Biden and has occasionally sympathized with Donald Trump. Investors have been known to pay a premium for high-profile personalities in other companies—Trump himself can attribute most of his $7.5 billion fortune to stock in his social media network Truth Social’s parent company, despite the company generating very little revenue.
Pershing is undoubtedly banking that Ackman’s stature will bring in more assets and fees, and for the first time cited the “broad viewpoints” of its employees as an asset for the firm in its annual report this year. “While we don’t all agree on who should be our next U.S. president, we are closely aligned on our long-term mission of driving value for our investors,” the report said.
Most of the $1.05 billion in funding will be invested in Pershing Square USA and other funds, and the valuation will benefit all the firm’s employee owners, chiefly Ackman’s second-in-command, Israel. The 39-year-old alum of the University of Pennsylvania’s undergraduate Wharton School has worked at Pershing since 2009 following a two-year stint in investment banking at Goldman Sachs. Ackman named Israel his CIO and designated successor in 2022, though he has no plans to step down as CEO.
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