Last month, in an interview, Bill Ackman said that he is “very bullish.” Pershing Square Holdings brought over $2 billion worth of stocks as US stock markets crashed. That’s roughly a quarter of the fund’s total assets. Ackman brought shares in Hilton, Starbucks, and Berkshire Hathaway. Ackman first took a stake in Berkshire Hathaway last year. Notably, Berkshire Hathaway underperformed the S&P 500 by a wide margin last year. Chairman Warren Buffett has failed to beat the markets this year as well even as conditions were ripe for outperformance.
Bill Ackman’s faith in Berkshire Hathaway might not have paid off for now, but Hilton and Starbucks have jumped sharply higher from their March lows. Notably, Pershing Square Holdings’ listed share is trading at a massive discount to its net asset value (or NAV). To be sure, it is not uncommon for close-ended funds to trade at a discount to their NAVs. However, the quantum of discount is quite wide currently for Pershing Square Holdings.
Meanwhile, on April 17, Pershing Square Holdings repurchased 33,008 shares on the London Stock exchange at an average price of 1,596 pence or $19.95 per share. It also repurchased 30,184 shares on the Euronext Amsterdam with an average price of $19.91 per share. According to Pershing Square, its NAV was $30.21 as of April 14. Pershing Square Holdings would hold the repurchased shares in treasury.
Berkshire Hathaway recently trimmed stakes in some airline companies and banks. When the pandemic began, Warren Buffett said that it would not have any long-term impact. He also said that he would be more comfortable buying stocks at lower prices. We'll have to wait for the next month to see what all stocks the Oracle of Omaha brought and sold in the first quarter.
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