Annual Investor Presentation
February 8, 2024
2
Disclaimer
All information provided herein is for informational purposes only and should not be deemed as a recommendation to buy or sell any security mentioned. Pershing Square Capital
Management, L.P. (“Pershing Square”) believes this presentation contains a balanced presentation of the performance of the portfolio it manages, including a general summary of certain
portfolio holdings that have both over and under performed our expectations.
This presentation contains information and analyses relating to all of the publicly disclosed positions over 50 basis points in the portfolio of Pershing Square Holdings, Ltd. (“PSH” or the
“Company”) during 2023. Pershing Square may currently or in the future buy, sell, cover or otherwise change the form of its investments discussed in this presentation for any reason.
Pershing Square hereby disclaims any duty to provide any updates or changes to the information contained herein including, without limitation, the manner or type of any Pershing
Square investment.
Past performance is not necessarily indicative of future results. All investments involve risk including the loss of principal. It should not be assumed that any of the transactions or
investments discussed herein were or will prove to be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment
performance of the investments discussed herein. Specific companies or investments shown in this presentation are meant to demonstrate Pershing Square’s active investment style
and the types of industries and instruments in which we invest and are not selected based on past performance.
The analyses and conclusions of Pershing Square contained in this presentation are based on publicly available information. Pershing Square recognizes that there may be confidential
or otherwise non-public information in the possession of the companies discussed in the presentation and others that could lead these companies to disagree with Pershing Square’s
conclusions. The analyses provided include certain statements, assumptions, estimates and projections prepared with respect to, among other things, the historical and anticipated
operating performance of the companies. Such statements, assumptions, estimates, and projections reflect various assumptions by Pershing Square concerning anticipated results that
are inherently subject to significant economic, competitive, legal, regulatory, and other uncertainties and contingencies and have been included solely for illustrative purposes. No
representations, express or implied, are made as to the accuracy or completeness of such statements, assumptions, estimates or projections or with respect to any other materials
herein. Any forward-looking statement contained in this presentation is subject to various risks and uncertainties. See also “Forward-Looking Statements” in Additional Disclaimers and
Notes to Performance Results at the end of this presentation. All trademarks included in this presentation are the property of their respective owners. This document may not be
distributed without the express written consent of Pershing Square and does not constitute an offer to sell or the solicitation of an offer to purchase any security or investment product.
This presentation is expressly qualified in its entirety by reference to PSH’s prospectus which includes discussions of certain specific risk factors, tax considerations, fees and other
matters, and its other governing documents.
SEE ADDITIONAL DISCLAIMERS AND NOTES TO PERFORMANCE RESULTS AT THE END OF THIS PRESENTATION FOR ADDITIONAL IMPORTANT INFORMATION
Strategic Update
2023 PSH Performance Review
Q&A
Chairman’s Introduction
Business & Organizational Update
Agenda
Equity Portfolio Update
Chairman’s Introduction
Board of Directors of PSH
5
Summary ExperienceBoard Director
‾
Director, Caledonia Investments plc and BlueRiver Acquisition Corp.
‾
Former Director, Investec Asset Management
‾
Former Partner, Providence Equity Partners, Electra Private Equity Partners, and JF Electra Ltd
‾
Morgan Stanley (New York), Bain and Company (London)
Anne Farlow
Independent Director
Chairman of the Board
‾
Director, U.K. Office for Budget Responsibility, TwentyFour Income Fund Ltd, Mercator Media, Scottish American
Investment Co, and BH Macro Ltd
‾
Former Governor, London School of Economics
‾
Former Head of Global Research, HSBC and Former Head of European Broadcast, Bloomberg LP
‾
Nomura International, Deutsche Bank
Bronwyn Curtis, OBE
Senior Independent Director
‾
President, the Investment Manager
‾
Former CFO, the Investment Manager
‾
Former CFO, Gotham Partners
‾
Former Senior Auditor, Deloitte & Touche
Nicholas Botta
Director
‾
Chairman of the Board, Onward Opportunities Ltd, SW7 Holdings Ltd, and Butterfield Bank Jersey Ltd
‾
Director TaDaweb S.A., Longview Partners (Guernsey) Ltd, and Close Brothers Asset Management (Guernsey) Ltd
‾
Former Chairman of the Board, Boussard & Gavaudan Holding Ltd
‾
Former Director of St John Ambulance, Guernsey
Andrew Henton
Independent Director
‾
Co-Founder and Managing Partner, Helios Investment Partners
‾
Co-CEO and Director, Helios Fairfax Partners Corp (TSX:HFPC)
‾
Director, Helios Towers plc and NBA Africa
‾
Member, Harvard Law School Dean’s Advisory Board
‾
Former Member, MIT Corporation (Massachusetts Institute of Technology’s board of trustees)
Tope Lawani
Independent Director
‾
Chairman of the Board, Bremont Watch Company
‾
Trustee and Chairman of investment advisory group, Comic Relief
‾
Former Chairman and CEO of Rococo Chocolates, Former CEO of Sterling Relocation and Propertyfinder.co.uk
‾
Former Director of Thistle Hotels, English Welsh & Scottish Railways, and Graham-Field Health Products
Rupert Morley
Independent Director
Rupert Morley, upon his re-election, will replace Anne Farlow as Chairman of the
Board as of the Annual General Meeting on May 8, 2024
6
PSH Board Process
Quarterly meetings; additional meetings as needed
Review and monitor
Investment performance and portfolio
Operational risk management
Investor relations
Share price performance
Expenses
Regulatory matters
Board Committees (membership limited to independent directors
except for risk and nomination committees)
Audit Committee
Management Engagement Committee
Nomination Committee
Remuneration Committee
Risk Committee
Additional matters
7
Share buybacks
Dividend policy
Debt strategy
ESG considerations
Strategies for addressing discount to NAV
U.S. listing
PSH Board Additional Matters Considered in 2023
8
Note: PSH share price performance reflects public shares traded on Euronext Amsterdam (PSH:NA) and includes dividend reinvestment. All index returns include dividend reinvestment. Past performance is not necessarily indicative of future
results. All investments involve the possibility of profit and the risk of loss, including the loss of principal. Please see the additional disclaimers and notes to performance results at the end of this presentation.
(1) HFRX Equity Hedge Index and HFRX Activist Index are constructed and maintained by Hedge Fund Research, Inc. HFRX Equity Hedge Index includes funds that maintain long and short positions in primarily equity and equity derivative
securities and employ a broad range of fundamental and quantitative techniques in their investment process. HFRX Activist Index includes funds with activist strategies and 50%+ of portfolio in activist situations.
(2) Public shares of PSH commenced trading on Euronext Amsterdam N.V. on October 13, 2014. The annualized return of PSH share price including dividend reinvestment between October 13, 2014 and December 31, 2023 was 7.9%.
(3) As of 2/6/2024.
Overview of 2023 Performance
PSH generated 2023 NAV appreciation of 26.7% and total shareholder return of
36.0%, enhancing its substantial long-term outperformance vs. market indices
PSH’s discount to NAV narrowed by 4.5% from 33.2% in the beginning of 2023 to
28.7% at year end, and has narrowed further to 27.0% thus far in 2024
(3)
Annualized Returns
Market Indices HFRX Indices
PSH
S&P
FTSE 100
MSCI Equity
Period NAV Share Price 500 $USD £GBP World Activist Hedge
2023 26.7% 36.0% 26.3% 13.5% 7.7% 24.4% 11.5% 6.9%
3-Year 13.5% 11.3% 10.0% 7.6% 10.1% 7.8% 9.3% 5.1%
5-Year 31.2% 31.2% 15.7% 6.7% 6.7% 13.4% 12.2% 6.1%
10-Year 13.6% N/A 12.0% 2.6% 5.3% 9.2% 7.6% 2.9%
(1)
(2)
(1)
Total Debt to Total Capital Ratio Over Time
Regardless of market or portfolio volatility, PSH has continuously
maintained conservative leverage levels and investment grade ratings
9
Total Debt to Total Capital Ratio | 6/30/2015 to 12/31/2023:
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
7/25/19: Private
placement of
$400mm of 4.950%,
20-Year Unsecured
Bonds Due 2039
6/26/15: Issued
$1,000mm of 5.500%,
7-Year Unsecured
Bonds Due 2022
8/26/20: Private placement of
$200mm of 3.000%, 12-Year
Unsecured Bonds Due 2032
11/2/20: Issued $500mm of
3.250%, 10-Year Unsecured
Bonds Due 2030
10/1/21: Issued $700mm of 3.250%,
10-Year Unsecured Bonds Due 2031
and €500mm of 1.375%, 6-Year
EUR-Denominated Unsecured
Bonds Due 2027
6/15/22: Redeemed
$631mm balance of
5.500% Unsecured
Bonds Due 2022
Total Debt as % of Total Capital
10/4/21: Redeemed
$369mm of 5.500%
Unsecured Bonds
Due 2022
Note: Total Capital and the ratio of Total Debt to Total Capital are calculated in accordance with the PSH Bonds’ Indentures. Total Capital is defined as Net Asset Value plus Total Debt and is net of accrued performance fee.
(1) Assumes a 1.10x EUR/USD exchange rate for €500mm EUR-denominated bonds.
16.3%
(1)
PSH has attractive credit characteristics
Simple, transparent and highly liquid investment portfolio
Significant asset coverage: PSH debt is covered 6x by total assets
(1)
Underlying portfolio companies are diversified across industries and have relatively
low commodity exposure and cyclical risk
Proven investment strategy with a long-term track record
Facilitates opportunistic issuances
Laddered maturities from 2027 to 2039 are well matched with PSH’s
long-term investment horizon
Weighted-average maturity of 8 years; weighted-average cost of capital of 3.08%
No margin leverage
No mark-to-market covenants
Long-Term Debt Financing Strategy
10
Our ability to access low-cost, investment grade, long-term debt is an
important competitive advantage for PSH
(1) Total Assets is defined as Net Asset Value plus Total Debt as of 12/31/2023.
The board continues to believe that the most powerful driver of long-term shareholder
returns will be continued strong absolute and relative NAV performance
11
Strategies to Address the Discount
Past performance is not necessarily indicative of future results. All investments involve the possibility of profit and the risk of loss, including the loss of principal. Please see the additional disclaimers and notes to performance results at the end
of this presentation.
(1) The 1-year, 5-year, and 10-year compound annual NAV net returns for PSH were 26.7%, 31.2%, and 13.6%, respectively. See slide 8 for further details.
(2) FTSE 100 companies ranked by market capitalization as of February 6, 2024.
(3) Reflects public and management shares outstanding as of April 30, 2017 through December 31, 2023.
(4) Ownership percentage based on current shares outstanding. Includes Pershing Square employees and affiliates and charitable entities associated with Pershing Square employees or Pershing Square affiliates.
Strong investment performance
Compound annual NAV net returns of 31.2% for the last five years
(1)
Global marketing efforts outside of the United States
Inclusion of PSH in the FTSE 100 index in December 2020. Now the 58
th
largest company by market capitalization
(2)
AIC reclassification from Hedge Funds to U.S. Equity
Retained Cadarn Capital for increased UK/European/Asian distribution and LodeRock Advisors for increased
Canadian distribution
Corporate actions
Gained premium listing on the London Stock Exchange in May 2017
PSH has repurchased 64 million shares, representing 26% of initial shares outstanding, at an average price of $20
and average discount to NAV of 29%
(3)
In 2023, PSH repurchased 5 million shares at an average price of $38 and average discount to NAV of 34%
PSCM affiliates have accumulated a 27% ownership stake through outright purchases
(4)
Initiated quarterly dividend in Q1 2019. Revised dividend policy in Q2 2022 whereby dividends now increase with NAV
Strategic Update
U.S. Listing Update
13
In 2023, we thoroughly examined the options for a U.S. listing to
increase the number of investors who can own PSH
We encountered numerous issues, including:
Issues with asset composition and relative size of merger candidates
Questions concerning trading price of newly consolidated enterprise
Limitations and restrictions due to the Investment Company Act of 1940
Adverse tax considerations
Ultimately, we decided a U.S. listing was not viable due to the above
considerations
PSH will remain a publicly-traded closed-end fund over the long term
PSH Fee Offset Arrangement
14
PSH’s original Fee Offset Arrangement (the “FOA”) was designed to reduce
PSH performance fees by an amount equal to 20% of performance fees
earned on any non-PSH capital managed by PSCM
(1)
The FOA benefit does not become effective until the $120 million of PSH’s IPO costs
borne by PSCM (the “Offset Amount”) are repaid
As of December 31, 2023, balance of the Offset Amount was $36 million
Fee offset amounts realized to-date have been limited by a material decline in
fee-paying capital at PSCM’s private funds in 2015-2018
Since the balance of the Offset Amount has not yet been reduced to zero, PSH has not
received any fee reduction benefit from the original FOA
(1) Subject to certain exceptions.
Amendments to Fee Offset Arrangement
15
As of February 7, 2024, the FOA has been amended to (1) further increase and
more immediately recognize the potential reduction in PSH performance fees, and
(2) align PSH shareholders with PSCM’s future growth
Current balance of the Offset Amount ($36 million) has been eliminated
PSH could benefit from reduced performance fees immediately, beginning in 2024
PSH to receive an additional fee reduction from 20% of management fees earned on any
Pershing Square funds that invest in public securities which do not charge
performance fees
(1)
Countercyclical benefit: Fee offsets derived from recurring management fees will have a greater relative
impact on PSH’s performance fee percentage in years with lower gross investment returns
PSH will continue to receive a fee reduction from 20% of performance fees earned on non-PSH
investment funds managed by PSCM that invest in public securities which do charge performance fees
(1)
PSCM intends to launch new investment funds which could substantially reduce PSH
performance fees over time
Registration statement for a new U.S.-listed, closed-end fund has been publicly filed with the SEC
Additional new investment funds under active consideration
1
3
2
(1) Subject to certain exceptions.
Illustrative Fee Reduction Impact
16
Through its amended FOA, PSH could realize a meaningful reduction in
performance fees as PSCM launches new investment funds
$10 billion
Illustrative AUM of New
Management Fee-Only Fund
Launched by PSCM
Illustrative Fee Reduction Impact from New Management Fee-Only Fund Launched by PSCM:
(1)
2.0%
Management Fees
As % of AUM
20%
% of New Fund’s
Management Fees
Credited to PSH
$40 million
PSH Performance Fee
Reduction Impact
Assuming PSH generates 15% gross returns, the fee offset from the illustrative new fund alone will
reduce PSH’s performance fee percentage from 16.0% to 13.5%
(2)
Assuming PSH generates 5% gross returns, the fee offset from the illustrative new fund will have an
even greater impact, reducing PSH’s performance fee percentage from 16.0% to 6.5%
(2)
Note: Calculation above is for illustrative purposes only and is not intended to give any projection of or assurance as to the amount of assets under management of any new fund launched by PSCM and the resulting impact on PSH
performance fees.
(1) Does not include any potential PSH performance fee reduction from performance fees earned from PSCM’s two private funds, Pershing Square, L.P. (“PSLP”) and Pershing Square International, Ltd. (“PSI Ltd”), or any other future
funds launched beyond the illustrative new fund highlighted above.
(2) Potential reduction of PSH’s estimated annual performance fee is based on PSH’s NAV as of December 31, 2023.
2023 Performance Review
Strong Performance in 2023 Ahead of Market Indices
18
1
2023 Return: PSH NAV Net of Fees vs. Indices Total Return in USD
Reflects returns from 12/31/22 through 12/31/23, including dividend reinvestment for indices. Past performance is not necessarily indicative of future results. All investments involve the possibility of profit and the risk of loss, including the loss of
principal. Please see the additional disclaimers and notes to performance results at the end of this presentation.
(1) FTSE 100 index reflects USD-denominated returns for consistency with other indices.
(2) HFRX Equity Hedge Index and HFRX Activist Index are constructed and maintained by Hedge Fund Research, Inc. HFRX Equity Hedge Index includes funds that maintain long and short positions in primarily equity and equity derivative
securities and employ a broad range of fundamental and quantitative techniques in their investment process. HFRX Activist Index includes funds with activist strategies and 50%+ of portfolio in activist situations.
26.7%
26.3%
13.5%
24.4%
11.5%
6.9%
PSH NAV S&P 500 MSCI
World
HFRX Equity
Hedge
Index
(2)
HFRX
Activist
Index
(2)
FTSE
100
(1)
Substantial Five-Year Outperformance
19
1
5 Year Compound Annual Return: PSH NAV Net of Fees vs. Indices Total Return in USD
Reflects returns from 12/31/18 through 12/31/23, including dividend reinvestment for indices. Please refer to page 8 for PSH’s one and ten-year annualized returns. Past performance is not necessarily indicative of future results. All investments
involve the possibility of profit and the risk of loss, including the loss of principal. Please see the additional disclaimers and notes to performance results at the end of this presentation.
(1) FTSE 100 index reflects USD-denominated returns for consistency with other indices.
(2) HFRX Equity Hedge Index and HFRX Activist Index are constructed and maintained by Hedge Fund Research, Inc. HFRX Equity Hedge Index includes funds that maintain long and short positions in primarily equity and equity derivative
securities and employ a broad range of fundamental and quantitative techniques in their investment process. HFRX Activist Index includes funds with activist strategies and 50%+ of portfolio in activist situations.
PSH Annual Outperformance: 1,550 bps 2,450 bps 1,780 bps 1,900 bps 2,510 bps
31.2%
15.7%
6.7%
13.4%
12.2%
6.1%
PSH NAV S&P 500 MSCI
World
HFRX Equity
Hedge
Index
(2)
HFRX
Activist
Index
(2)
FTSE
100
(1)
Pershing Square L.P. (“PSLP”) / PSH Annual Net Returns
20
Annual Net Returns
Year PSLP / PSH S&P 500
2004
42.6% 10.9%
2005
39.9% 4.9%
2006
22.5% 15.8%
2007
22.0% 5.5%
2008
(13.0%) (37.0%)
2009
40.6% 26.4%
2010
29.7% 15.1%
2011
(1.1%) 2.1%
2012
13.3% 16.0%
2013
9.6% 32.4%
2014
40.4% 13.7%
2015
(20.5%) 1.4%
2016
(13.5%) 11.9%
2017
(4.0%) 21.8%
2018
(0.7%) (4.4%)
2019
58.1% 31.5%
2020
70.2% 18.4%
2021
26.9% 28.7%
2022
(8.8%) (18.1%)
2023
26.7% 26.3%
Compound Annual Return
Since Firm Inception (1/1/2004)
(1)
16.4% 9.7%
Since PSH Inception (12/31/2012) 13.2% 13.7%
Past performance is not necessarily indicative of future results. All investments involve the possibility of profit and the risk of loss, including the loss of principal. Please see the additional disclaimers and notes to performance results at the end
of this presentation.
(1) PSLP/PSH data represents returns an investor would have earned by investing in PSLP at its January 1, 2004 inception and converting to PSH at its launch on December 31, 2012.
PSLP
1.5% Management Fee,
20% Incentive Fee,
Unlevered
PSH
1.5% Management Fee,
16% Incentive Fee,
Modestly Levered
PSLP / PSH Cumulative Net Returns
21
Net Returns vs. S&P 500
through December 31, 2023
Note: PSLP/PSH data represents returns an investor would have earned by investing in PSLP at its January 1, 2004 inception and converting to PSH at its launch on December 31, 2012.
Past performance is not necessarily indicative of future results. All investments involve the possibility of profit and the risk of loss, including the loss of principal. Please see the additional disclaimers and notes to performance results at the end
of this presentation.
PSLP / PSH
PSH
27%
289%
258%
292%
1,979%
26%
107%
211%
312%
535%
1-Year 5-Year 10-Year Since PSH Inception
(12/31/2012)
Since Firm Inception
(1/1/2004)
PSLP / PSH S&P 500
0%
200%
400%
600%
800%
1,000%
1,200%
1,400%
1,600%
1,800%
2,000%
2,200%
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23
22
PSH Annual Investor Presentation
January 29, 2018
Cumulative Net Returns Since Inception
Note: PSLP/PSH data represents returns an investor would have earned by investing in PSLP at its January 1, 2004 inception and converting to PSH at its launch on December 31, 2012.
Past performance is not necessarily indicative of future results. All investments involve the possibility of profit and the risk of loss, including the loss of principal. Please see the additional disclaimers and notes to performance results at the end
of this presentation.
PSLP / PSH
Since Firm Inception (1/1/04 – 12/31/23)
Since PSH Inception
(12/31/12 – 12/31/23)
PSH: 292%
S&P 500: 312%
PSLP/PSH:
1,979%
S&P 500:
535%
Reinforced Commitment to Core Principles
23
2023 Contributors
24
Note: Positions with contributions to performance of 50 basis points or more are listed above separately, while positions with contributions to performance of less than 50 basis points are aggregated.
Past performance is not a guarantee of future results. All investments involve risk, including the loss of principal. Please see the additional disclaimers and notes to performance results at the end of this presentation.
(1) Net Contributors is provided solely to comply with Rule 206(4)-1 under the Investment Advisers Act of 1940 (“Advisers Act”) and related Frequently Asked Questions issued by the U.S. Securities and Exchange Commission (“SEC”). Net
Contributors reflects an adjustment to the gross return of each investment for such investment’s allocable portion of PSH’s performance fee and quarterly management fee, based on PSH’s exposure to such investment. Please see the
additional disclaimers and notes to performance results at the end of this presentation.
Contributors Gross
Net
(1)
Chipotle Mexican Grill 8.2% 7.0%
Universal Music Group 5.6% 4.7%
Alphabet 5.4% 4.6%
Hilton Worldwide 5.1% 4.3%
Restaurant Brands International 3.3% 2.8%
Lowe's 2.3% 1.9%
Howard Hughes Holdings 1.4% 1.2%
Accretion from Share Buybacks 1.1% 0.9%
Fannie Mae 0.8% 0.7%
Canadian Pacific 0.6% 0.5%
Freddie Mac 0.5% 0.4%
Total Contributors 34.3% 29.0%
2023 Detractors
25
Detractors Gross
Net
(1)
Energy Hedge (1.1%) (1.0%)
Interest Rate Swaptions (0.5%) (0.5%)
All Other Positions & Other Income / Expense (0.1%) (0.1%)
Total Detractors - Underlying Portfolio (1.7%) (1.6%)
Bond Interest Expense (0.8%) (0.7%)
Total Detractors - incl. Interest Expense (2.5%) (2.3%)
Note: Positions with contributions to performance of 50 basis points or more are listed above separately, while positions with contributions to performance of less than 50 basis points are aggregated.
Past performance is not a guarantee of future results. All investments involve risk, including the loss of principal. Please see the additional disclaimers and notes to performance results at the end of this presentation.
(1) Net Detractors is provided solely to comply with Rule 206(4)-1 under the Advisers Act of 1940 and related Frequently Asked Questions issued by the SEC. Net Detractors reflects an adjustment to the gross return of each
investment for such investment’s allocable portion of PSH’s performance fee and quarterly management fee, based on PSH’s exposure to such investment. Please see the additional disclaimers and notes to performance results at the
end of this presentation.
Total Assets Under Management
26
AUM
(1)
Insider Capital
(2)
As of 2/6/2024 ($ in millions) Total Equity
Total % of Equity
Pershing Square Holdings ("PSH") $14,591 $12,254
$3,313 27%
Pershing Square, L.P. ("PSLP") 1,410 1,410
537 38%
Pershing Square International ("PSI") 602 602
155 26%
Total Core Funds $16,604 $14,266
$4,005 28%
PS VII Funds (UMG Co-Investment Vehicle) 1,577 1,577
450 29%
Total Firm $18,181 $15,843
$4,455 28%
Note: Total Firm numbers include PS VII Master, L.P. and PS VII A International, L.P. (together, the “PSVII Funds”), which operate as co-investment vehicles investing primarily in securities of (or otherwise seeking to be exposed to the
value of securities issued by) Universal Music Group N.V. without double counting PSH’s investment in PS VII Master, L.P. As of February 6, 2024, PSH’s investment in PS VII Master, L.P. totaled $313.4M. Assets under management are
gross of any accrued performance fees. Past performance is not necessarily indicative of future results. All investments involve the possibility of profit and the risk of loss, including the loss of principal. Please see the additional disclaimers
and notes to performance results at the end of this presentation.
(1) Total AUM includes $1.8 billion and €500 million (translated to USD at the prevailing exchange rate) of PSH bond proceeds. Equity AUM excludes these amounts.
(2) Includes Pershing Square employees and affiliates and charitable entities associated with Pershing Square employees or Pershing Square affiliates.
Business and Organizational Update
28
Strong gains across the portfolio enabled PSH NAV to slightly outperform,
and PSH share price to substantially outperform, the S&P 500 in 2023
2023 Key Developments
Initiated new investment in Alphabet, the parent company of Google
Closely monitored macroeconomic developments and evaluated hedge
opportunities to protect our portfolio from downside risks
Launched Pershing Square SPARC Holdings (“SPARC”) and began search
for an attractive merger partner
Continued progress at Universal Music Group, our largest investment
Exited Lowe’s after a highly successful, nearly six-year holding period,
freeing up capital for new opportunities
Note: PSH share price performance reflects public shares traded on Euronext Amsterdam (PSH:NA) and includes dividend reinvestment.
Core Hedging Principles
29
Asymmetric payoff structures
Limited upfront investment and carrying costs
Opportunities to generate large multiples of capital
Limited downside in the event potential risk does not transpire
Monetization provides liquidity during periods of market dislocation
Hedges often become valuable when equity markets are cheap
Enables us to increase our exposure to high-quality businesses at deeply
discounted valuations
We believe our asymmetric hedging strategy is a superior alternative to a large cash position or a
continuous hedging program, both of which can be a significant drag on long-term performance
We seek to opportunistically invest in asymmetric hedges to protect our
portfolio against macroeconomic risks and capitalize on market volatility
The above is intended to be illustrative and there is no guarantee that Pershing Square will be able to identify the constituent investments or create a portfolio that reflects these characteristics.
Differentiated Macroeconomic Research Process
30
In addition to conventional top-down macro research, Pershing Square is
uniquely well-positioned to leverage perspectives from individual companies
Aggregate Government
Agency Data
Broad Survey & Sentiment
Measures
Individual Company
Results & Commentary
Real & Nominal GDP
Personal Income & Spending
CPI & PCE inflation
Employment report
Unemployment claims
Banking system & household
balance sheet data
Quarterly earnings &
conference call transcripts
Real-time views on:
-
Investment & hiring plans
-
Consumer strength
-
Price-setting behavior
-
Financial conditions
S&P & ISM PMIs
Regional Fed surveys
Fed Beige Book
Senior Loan Officer Opinion
Survey (SLOOs)
Inflation expectations
NFIB small business survey
We believe company research can yield differentiated macro insights and is highly synergistic with Pershing
Square’s core equity strategy, which has a coverage universe spanning the vast majority of S&P 500 companies
31
No initial blank check IPO; no cash is held in trust until deal closure
Special purpose acquisition rights (“SPARs”) were distributed for no consideration to former Pershing Square
Tontine Holdings shareholders and warrantholders
No “shot clock”
Up to 10 years to complete a transaction
Increased transaction certainty
Pershing Square believes it can enter into a definitive agreement in 45 days, the time required for due
diligence and negotiation
Investors opt-in to the initial business combination (“IBC”)
Reduced opportunity cost with no investor funding until a target is identified and a registration statement
becomes effective that describes in full the proposed business combination
SPARs will not be transferable or quoted until the post-effective amendment is distributed to SPAR holders
Flexible exercise price and amount of capital
Amount of capital raised can be precisely tailored to capital requirements of merger partner
Minimal frictional costs
No underwriting fees or public shareholder warrants
No conventional sponsor incentive
Pure common stock capital structure other than 20% out-of-the-money warrants on up to 4.95% of shares
outstanding for the Pershing Square funds and up to 0.154% for SPARC’s advisory board (up to 5.1% in
total)
If there are any unexercised SPARs, the amount of Sponsor Warrants will be reduced proportionately
Pershing Square SPARC Holdings (“SPARC”)
Key Highlights
Case Study: Negotiated Purchase of UMG
32
Pershing Square Tontine Holdings (“PSTH”) announced agreement to acquire
10% of UMG from Vivendi in June 2021
Followed seven months of diligence and negotiations between Pershing Square and Vivendi
Pershing Square funds assumed PSTH’s purchase obligations in July 2021
Driven by feedback received from the SEC on the proposed transaction structure, PSTH’s
board concluded that it was unlikely to receive necessary approvals in time
Completed the purchase of UMG shares ahead of schedule and on original terms
Preserved Pershing Square’s reputation for doing what we say we’re going to do
Purchase completed in September 2021 before UMG began trading as a public company
Bill joined the board of UMG in May 2022
In September 2021, Pershing Square acquired 10% of UMG from Vivendi at a
negotiated equity value of €33 billion or €18.27 per share
(1)
UMG shares have generated a total shareholder return of 58% (Net: 40%) from our
average cost at announcement, vs. a 18% return for the S&P 500
(2)
Note: The purchase of UMG is provided to demonstrate Pershing Square’s ability to identify and close a private transaction and not on the basis of performance or to indicate future returns of the investment, SPARC or the Pershing Square funds.
Please see the additional disclaimers and notes to performance results at the end of the presentation.
(1) Reflects average cost as per negotiated transaction price between Pershing Square and Vivendi and includes transaction fees. Amounts have been converted to EUR based on negotiated FX rate of 1.20 EUR to 1.00 USD.
(2) Returns are as of 2/6/2024. Net return is provided solely to comply with Rule 206(4)-1 under the Advisers Act and related Frequently Asked Questions issued by the SEC and reflects an adjustment for the (a) quarterly management fee, (b)
expenses (calculated using the expense ratio for the applicable time period), and (c) performance fee (if any) charged during relevant time period.
Limited turnover since our strategic pivot six years ago
Zero departures from the investment team since mid-2018, and one addition in September 2021
Team stability across the firm differentiates Pershing Square from the rest of the industry
Strong economies of scale with small, trusted, high-performance team
Proven ability for the existing team to enhance its competencies over time, including
macroeconomic hedging and private-to-public investing
Work-from-office culture builds trust, enables collaboration and creativity, and
helps drive strong results
Design and layout of office have proven to be valuable in a post-COVID world
Lean, collaborative, and investment-centric organization continues to
perform at the highest levels
33
Organizational Update
PSCM Organization Chart
34
Name (PSCM Tenure in Years)
PSCM
Tenure
(Years)
Career
Experience
(Years)
Education and Summary Prior ExperienceEmployee
2032
Gotham Partners, Co-Founder and Portfolio Manager (1992 - 2003)
M.B.A., Harvard Business School, 1992
A.B., Harvard College, magna cum laude, 1988
Bill Ackman
CEO / Portfolio Manager
1517
Goldman Sachs, Analyst (2007 - 2009)
B.S.E., The Wharton School, summa cum laude, beta gamma sigma, 2007
Ryan Israel
Chief Investment Officer
1226
The Blackstone Group, Senior Managing Director (1999 - 2012)
B.S., Cornell University, 1997
Ben Hakim
1115
Apollo Global Management, Private Equity Associate (2011 - 2013)
Goldman Sachs, Analyst (2009 - 2011)
B.S.E., The Wharton School, summa cum laude, beta gamma sigma, 2009
Anthony Massaro
1014
KKR, Private Equity Associate (2012 - 2014)
Goldman Sachs, Analyst (2010 - 2012)
B.A., The University of Western Ontario, Richard Ivey School of Business, Ivey Scholar, 2010
Charles Korn
711
KKR, Private Equity Associate (2015 - 2017)
Goldman Sachs, Analyst (2013 - 2015)
B.S.E, Princeton University, summa cum laude, phi beta kappa, 2013
Bharath Alamanda
711
Hellman & Friedman, Private Equity Associate (2015 - 2017)
Evercore, Analyst (2013 - 2015)
B.A., The University of Western Ontario, Richard Ivey School of Business, Ivey Scholar, 2013
Feroz Qayyum
38
Warburg Pincus, Private Equity Associate (2019 - 2021)
Centerview Partners, Analyst (2016 - 2019)
B.S.E., The Wharton School, summa cum laude, 2016
Manning Feng
35
Pershing Square Investment Team
Equity Portfolio Update
Music is in the early stages of higher monetization
UMG is harnessing growth opportunities from artificial intelligence
Recently enacted price increases are beginning to benefit revenues
Adoption of “artist-centric” principles will further shift royalties towards UMG
and its artists
Announced revenue-generating partnerships with Google among others
Shaping the industry by ensuring regulatory and legal protection for its artists
Opportunity for cost rationalization while maintaining industry-leading A&R
and marketing investments
Additional details to be shared with investors shortly
Universal Music Group (“UMG”)
UMG is a high-quality, capital-light, rapidly growing royalty on
greater music consumption
UMG’s cost savings plan will lead to faster profit growth
37
Source: Company filings. This slide contains Pershing Square’s own views and opinions, based on publicly available information, to illustrate Pershing Square’s thinking on the matters therein.
Given its market position and decades-long runway for sustained earnings growth, UMG’s
current valuation represents a discount to its intrinsic value
€ 15
€ 18
€ 21
€ 24
€ 27
€ 30
Sep-2021 Jan-2022 May-2022 Sep-2022 Jan-2023 May-2023 Sep-2023 Jan-2024
9/21/21: UMG completes
separation from Vivendi and
begins trading on the
Euronext Amsterdam
38
Share price
€27.28
UMG Share Price Performance from 9/21/2021 to 2/6/2024 (€EUR):
UMG’s share price including dividend reinvestment increased 17% in 2023 and
has increased 6% year-to-date in 2024
(1)
UMG Share Price Performance Since IPO
10/24/22: Apple Music
increases prices by 10% to
20%. YouTube increases its
premium family plan’s
pricing by 28%
1/19/23: Amazon
increases prices
by 10% to 20%
Note: The performance of UMG’s share price is provided for illustrative purposes only and is not an indication of past or future returns of the Pershing Square funds. The graph above shows only UMG’s share price over time, not the value of
PSH’s investment in UMG, and is provided as context for Pershing Square’s views of UMG. For a variety of potential reasons, such as timing of purchases and sales, use of derivative instruments, and others, PSH’s return on its investment may
differ substantially from UMG’s change in share price. If PSH’s management fees, performance fees and fund expenses (calculated using PSH’s expense ratio for each year except that for years prior to PSH’s inception, the expense ratio for
PSLP was used) were applied to the ownership of a single share of UMG purchased at market price, including dividends without reinvestment, and held over the time period shown above, the imputed net return on that share would be 6%.
* Average cost as per negotiated transaction price between Pershing Square and Vivendi. Includes transaction fees. Based on negotiated FX rate of 1.20 EUR to 1.00 USD. Please see the additional disclaimers and notes to performance results
at the end of the presentation.
(1) As of 2/6/2024.
7/24/23: Spotify
increases prices by 6%
to 20% in 50+ markets
8/21/23: YouTube and
UMG announce joint
AI principles
9/6/23: UMG and Deezer announce
the first comprehensive artist-centric
music streaming model
11/21/23: Spotify announces
changes to royalty model to
drive $1 billion towards
professional artists
Average Negotiated
Purchase Price: €18.27*
Dominant player in secularly fast-growing global digital advertising market
Structural beneficiary of decade-long AI investment and leadership
Digital advertising well-poised to continue taking share from traditional media
Search & YouTube are two of the highest return and most resilient digital ad formats
Revenue growth in Alphabet’s core advertising business accelerated from 3% in Q1 to
10% in Q4 as the advertising market recovered
Alphabet (“GOOG”)
We invested in Alphabet in March 2023 when misplaced concerns over
the company’s AI positioning reduced its valuation to 15x earnings
Substantial margin expansion opportunity & capital return program
39
Source: Company filings. This slide contains Pershing Square’s own views and opinions, based on publicly available information, to illustrate Pershing Square’s thinking on the matters therein.
(1) Excludes one-time severance and real estate realignment charges.
EBIT margins expanded ~225bps in 2023 as Cloud profits reached breakeven levels
(1)
Cost control and operating leverage in under-earning segments (Cloud, YouTube)
should sustain margin expansion while Alphabet invests behind AI initiatives
Currently repurchasing ~4% of its shares on an annualized basis
AI is deeply embedded in and will continue to enhance applications including Search
and 14 other products with over 500 million users each
AI integration in advertiser tools will lead to greater ad conversion and monetization
40
GOOG Share Price Performance Since Inception
Since inception of the position, GOOG’s share price increased 56% in 2023 and has
increased 3% year-to-date in 2024
(1)
Note: The performance of GOOG’s share price is provided for illustrative purposes only and is not an indication of past or future returns of the Pershing Square funds. The graph above shows only GOOG’s share price over time, not the value of
PSH’s investment in GOOG, and is provided as context for Pershing Square’s views of GOOG. For a variety of potential reasons, such as timing of purchases and sales, use of derivative instruments, and others, PSH’s return on its investment may
differ substantially from GOOG’s change in share price. If PSH’s management fees, performance fees and fund expenses (calculated using PSH’s expense ratio for each year except that for years prior to PSH’s inception, the expense ratio for
PSLP was used) were applied to the ownership of a single share of GOOG purchased at market price, including dividends without reinvestment, and held over the time period shown above, the imputed net return on that share would be 49%.
*Weighted average cost at announcement date based on Pershing Square’s ownership of GOOG (Class C) and GOOGL (Class A). Please see the additional disclaimers and notes to performance results at the end of the presentation.
(1) As of 2/6/2024. Reflects share price of GOOG (Class C). Since inception of the position, the share price of GOOGL (Class A) increased 55% in 2023 and has increased 3% year-to-date in 2024.
$80
$100
$120
$140
$160
Mar-2023 May-2023 Jul-2023 Sep-2023 Nov-2023 Jan-2024
5/11/23: Company holds its annual I/O
developer conference, unveiling its new
state-of-the-art large-language models
and showcasing a variety of ground-
breaking AI use-cases
Share price
$145
GOOG Share Price Performance from 3/2/2023 to 2/6/2024:
7/25/23: Company reports strong Q2 earnings
with revenue growth acceleration and
significant operating leverage. Announces
Ruth Porat, current CFO, will transition into a
newly created role as President and Chief
Investment Officer of Alphabet
10/24/23: Company reports solid Q3
earnings. Despite growing at a robust
22% YoY growth rate, Cloud segment
revenue slightly misses expectations
due to industry-wide customer spend
optimization efforts
Average Cost at Announcement: $94*
Industry-leading same-store sales growth and profitability
Same-store sales (“SSS”) grew 8% in 2023, or 42% from 2019 levels
Traffic increased 5% in 2023, driven by Chipotle’s strong value proposition, faster
throughput, and successful menu innovations
2023 restaurant margin expansion of 230bps to 26.2% underscores
Chipotle’s highly attractive unit economic model
Chipotle has a long runway for robust growth
Improve in-restaurant execution to drive SSS and profitability
New unit growth of 8% to 10% annually in North America
International expansion, including growth in Europe and new franchise
agreement in the Middle East
Long-term potential to offer breakfast and leverage automation technology
to simplify operations
Chipotle’s continued focus on exceptional food and operational
excellence fueled impressive growth in 2023
41
Chipotle Mexican Grill (“CMG”)
Source: Company filings. This slide contains Pershing Square’s own views and opinions, based on publicly available information, to illustrate Pershing Square’s thinking on the matters therein.
$0
$500
$1,000
$1,500
$2,000
$2,500
Aug-2016 Jun-2017 Mar-2018 Jan-2019 Nov-2019 Sep-2020 Jul-2021 May-2022 Mar-2023 Jan-2024
$2,488
9/6/16: Pershing Square
files 13D after market
close with a 9.9% stake
12/16/16: CMG
announces four new
directors added to its
board, including Ali
Namvar and Matthew
Paull from Pershing
Square
11/29/17: CMG
announces search for
new CEO; founder
Steve Ells to become
Executive Chairman
2/13/18: CMG names
Brian Niccol as CEO
42
CMG Share Price Performance From 8/4/2016 to 2/6/2024:
Share price
CMG’s share price increased 65% in 2023 and has increased 9%
year-to-date in 2024
(1)
CMG Share Price Performance Since Inception
7/20/21: Average
restaurant sales eclipse
2015 peak of $2.5mm
during Q2
Note: The performance of CMG’s share price is provided for illustrative purposes only and is not an indication of past or future returns of the Pershing Square funds. The graph above shows only CMG’s share price over time, not the value of
PSH’s investment in CMG, and is provided as context for Pershing Square’s views of CMG. For a variety of potential reasons, such as timing of purchases and sales, use of derivative instruments, and others, PSH’s return on its investment
may differ substantially from CMG’s change in share price. If PSH’s management fees, performance fees and fund expenses (calculated using PSH’s expense ratio for each year except that for years prior to PSH’s inception, the expense ratio
for PSLP was used) were applied to the ownership of a single share of CMG purchased at market price and held over the time period shown above, the imputed net return on that share would be 305%.
*Average cost at announcement date. Please see the additional disclaimers and notes to performance results at the end of the presentation.
(1) As of 2/6/2024.
11/16/22: CMG opens 500
th
restaurant with a Chipotlane
digital drive-thru
7/18/23: CMG announces first-
ever franchise agreement
with Alshaya Group in the
Middle East
Average Cost at Announcement: $405*
Burger King U.S. turnaround well underway and poised for acceleration
Burger King’s U.S. comparable sales have improved each quarter, despite
majority of $400mm “Fuel the Flame” program yet to be spent
Recently announced acquisition of Carrols for $1bn accelerates remodels and
refranchising to smaller operators
New reporting highlights crown jewel international business
Pure franchised royalty model with decades-long runway of unit growth
Year-to-date profits have grown by 15%
Remains cheap relative to intrinsic value and peers
Trades at 20x our estimate of 2024 free cash flow per share excluding one-time
investments at Burger King U.S.
43
Restaurant Brands International (“QSR”)
QSR is a high-quality business with significant long-term growth
potential trading at a discounted valuation
Source: Company filings, PSCM estimates, Wall Street research. This slide contains Pershing Square’s own views and opinions, based on publicly available information, to illustrate Pershing Square’s thinking on the matters therein.
Unit growth to accelerate
New unit growth to accelerate to historic mid-single-digit rate in 2024
44
QSR Share Price Performance Since Inception
Note: The performance of QSR’s share price is provided for illustrative purposes only and is not an indication of past or future returns of the Pershing Square funds. The graph above shows only QSR’s share price over time, not the value of
PSH’s investment in QSR, and is provided as context for Pershing Square’s views of QSR. For a variety of potential reasons, such as timing of purchases and sales, use of derivative instruments, and others, PSH’s return on its investment may
differ substantially from QSR’s change in share price. If PSH’s management fees, performance fees and fund expenses (calculated using PSH’s expense ratio for each year except that for years prior to PSH’s inception, the expense ratio for
PSLP was used) were applied to the ownership of a single share of QSR purchased at market price, including dividends without reinvestment, and held over the time period shown above, the imputed net return on that share would be 267%.
*Average cost at announcement date. Please see the additional disclaimers and notes to performance results at the end of the presentation.
(1) As of 2/6/2024.
QSR’s share price including dividend reinvestment increased 25% in 2023
and has decreased 2% year-to-date in 2024
(1)
$10
$20
$30
$40
$50
$60
$70
$80
Jun-2012 Feb-2014 Oct-2015 May-2017 Jan-2019 Sep-2020 May-2022 Jan-2024
$76
8/24/14: QSR
announces
acquisition of Tim
Hortons
2/1/17: QSR announces
acquisition of Popeyes
11/15/21: QSR announces
acquisition of Firehouse
Subs
QSR Share Price Performance From 6/19/2012 to 2/6/2024:
Share price
11/16/22: QSR appoints
Patrick Doyle as
Executive Chairman
2/14/23: QSR appoints
Josh Kobza as CEO
1/16/24: QSR announces
acquisition of Carrols
Average Cost at Announcement: $16*
Hilton is a high-quality business with a long runway of strong earnings
growth led by an exceptional management team
45
Hilton Worldwide (“HLT”)
Source: Company filings. This slide contains Pershing Square’s own views and opinions, based on publicly available information, to illustrate Pershing Square’s thinking on the matters therein.
Strong financial performance in 2023
Average daily revenue per room (“RevPAR”) increased 13% over 2022
Earnings-per-share grew 27% YoY (now 59% above pre-COVID levels)
Industry conditions remain supportive
2024 RevPAR supported by improvement in occupancy (still below pre-COVID
levels), record group demand outlook, and strong international growth
Net unit growth poised to positively inflect in 2024
Hilton pipeline largest in history, supported by new brand concepts (Spark and H3)
HLT is well positioned for attractive long-term performance
Best-in-class value proposition drives market share increases and supports
industry leading net unit growth (“NUG”) of 6% to 7%
NUG supports high-single-digit compounded revenue growth
Expense control and buybacks support mid-teens free-cash-flow-per-share growth
$25
$50
$75
$100
$125
$150
$175
$200
Oct-2018 Jun-2019 Jan-2020 Sep-2020 May-2021 Jan-2022 Sep-2022 May-2023 Jan-2024
$195
3/10/20: HLT withdraws
2020 outlook
46
HLT Share Price Performance From 10/8/2018 to 2/6/2024:
Share price
HLT’s share price including dividend reinvestment increased 45% in 2023
and has increased 7% year-to-date in 2024
(1)
HLT Share Price Performance Since Inception
10/26/22: HLT reports first quarter with
systemwide RevPAR above 2019, despite
occupancy still not having fully recovered
April 2022: Industrywide nightly rates rise
above pre-COVID levels in response to broad-
based inflation and pent-up demand for travel
Note: The performance of HLT’s share price is provided for illustrative purposes only and is not an indication of past or future returns of the Pershing Square funds. The graph above shows only HLT’s share price over time, not the value of
PSH’s investment in HLT, and is provided as context for Pershing Square’s views of HLT. For a variety of potential reasons, such as timing of purchases and sales, use of derivative instruments, and others, PSH’s return on its investment may
differ substantially from HLT’s change in share price. If PSH’s management fees, performance fees and fund expenses (calculated using PSH’s expense ratio for each year except that for years prior to PSH’s inception, the expense ratio for
PSLP was used) were applied to the ownership of a single share of HLT purchased at market price, including dividends without reinvestment, and held over the time period shown above, the imputed net return on that share would be 107%.
*Average cost at announcement date. Please see the additional disclaimers and notes to performance results at the end of the presentation.
(1) As of 2/6/2024.
1/11/23: HLT unveils
Spark by Hilton, a new
value-driven offering
5/23/23: HLT announces
apartment-style
extended stay brand
Average Cost at Announcement: $73*
47
Howard Hughes Holdings (“HHH”)
HHH’s uniquely advantaged business model of owning master planned
communities (“MPCs”) drives resilient, long-term value creation
Strong 2023 performance highlights high-quality nature of MPC portfolio
Pershing Square purchased an additional 3.0 million shares of HHH in 2023 at an average price of
$72 per share and now owns 38% of the company
Shortage of resale housing inventory has fueled robust demand for new homes
2023 MPC EBT guidance of ~$325 million will mark record year of land sale profitability
Same-store NOI growth driven by rental rate increases and strong leasing activity
Closed on $435 million in aggregate new construction loans through Q3 2023 amidst a
challenging real estate financing environment
Announced plans to spin-off newly formed Seaport Entertainment division
Includes the Seaport District in NYC, the Las Vegas Aviators baseball team and the
company’s ownership stake in Jean-Georges Restaurants
Appointed Anton Nikodemus as new CEO of Seaport Entertainment
Former President & COO MGM CityCenter with over 30 years of entertainment & hospitality
industry experience
Planned separation will further establish HHH as a pure-play MPC business
Source: Company filings. This slide contains Pershing Square’s own views and opinions, based on publicly available information, to illustrate Pershing Square’s thinking on the matters therein.
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
Nov-2010 Sep-2012 Aug-2014 Jun-2016 May-2018 Mar-2020 Feb-2022 Jan-2024
$78
6/27/19: Announces its
Board of Directors will
be conducting a detailed
review of strategic
alternatives
10/21/19: Board concludes review
process and announces
transformation plan
3/27/20: Raises $600mm of equity at $50 per
share, including $500mm from Pershing
Square, to stabilize its balance sheet
12/1/20: Announces David
O’Reilly as new CEO and Jay
Cross as new President
48
HHH Share Price Performance Since Inception
HHH’s share price increased 12% in 2023 and has decreased 9%
year-to-date in 2024
(1)
HHH Share Price Performance From 11/9/2010 to 2/6/2024:
Share price
Note: The performance of HHH’s share price is provided for illustrative purposes only and is not an indication of past or future returns of the Pershing Square funds. The graph above shows only HHH’s share price over time, not the value of
PSH’s investment in HHH, and is provided as context for Pershing Square’s views of HHH. For a variety of potential reasons, such as timing of purchases and sales, use of derivative instruments, and others, PSH’s return on its investment
may differ substantially from HHH’s change in share price. If PSH’s management fees, performance fees and fund expenses (calculated using PSH’s expense ratio for each year except that for years prior to PSH’s inception, the expense ratio
for PSLP was used) were applied to the ownership of a single share of HHH purchased at market price and held over the time period shown above, the imputed net return on that share would be 23%.
*Average cost at announcement date. Please see the additional disclaimers and notes to performance results at the end of the presentation.
(1) As of 2/6/2024.
10/5/23: Announces plan to spin-off newly
formed Seaport Entertainment division and
names Anton Nikodemus as CEO of new division
11/29/22-12/11/23: Pershing Square
purchases an additional 5.2 million
shares at an average purchase
price of $72, increasing its
ownership stake in HHH to 38%
Average Cost at Announcement: $37*
High-quality, inflation-protected business model
49
Canadian Pacific Kansas City (“CPKC”)
CPKC is a unique North American railroad with significant earnings
growth potential led by an exceptional management team
Transformative acquisition creates significant shareholder value
Canadian Pacific closed its acquisition of Kansas City Southern in April
2023, creating the only railroad with a direct route from Canada to Mexico
Significant revenue and cost synergies drive accelerated earnings growth
Already exceeding management’s synergy targets despite soft demand environment
Likely beneficiary of deglobalization and North American onshoring
Line-of-sight to strong free cash flow conversion above 90%
Operates in an oligopolistic industry with significant barriers to entry
Pricing power underpins growth and provides inflation protection
Rail is often the cheapest or only viable method for transporting heavy freight over
long distances
Source: Company filings. This slide contains Pershing Square’s own views and opinions, based on publicly available information, to illustrate Pershing Square’s thinking on the matters therein.
The market is underestimating the long-term earnings potential of CPKC’s one-of-a-kind network
50
CPKC Share Price Performance Since Inception
$80
$85
$90
$95
$100
$105
$110
$115
$120
Oct-2021 Jan-2022 May-2022 Aug-2022 Nov-2022 Mar-2023 Jun-2023 Oct-2023 Jan-2024
C$114
CPKC Share Price Performance From 10/11/2021 to 2/6/2024 ($CAD):
Share price
CPKC’s share price including dividend reinvestment increased 4% in 2023
and has increased 9% year-to-date in 2024
(1)
12/14/21: CP closes KCS
acquisition into voting trust
11/23/21: Surface Transportation Board
accepts CP-KCS merger application as
complete and sets procedural schedule
Note: The performance of CP’s share price is provided for illustrative purposes only and is not an indication of past or future returns of the Pershing Square funds. The graph above shows only CP’s share price over time, not the value of
PSH’s investment in CP, and is provided as context for Pershing Square’s views of CP. For a variety of potential reasons, such as timing of purchases and sales, use of derivative instruments, and others, PSH’s return on its investment may
differ substantially from CP’s change in share price. If PSH’s management fees, performance fees and fund expenses (calculated using PSH’s expense ratio for each year except that for years prior to PSH’s inception, the expense ratio for
PSLP was used) were applied to the ownership of a single share of CP purchased at market price, including dividends without reinvestment, and held over the time period shown above, the imputed net return on that share would be 22%.
*Average cost at announcement date. Please see the additional disclaimers and notes to performance results at the end of the presentation.
(1) As of 2/6/2024.
3/15/23: Surface Transportation
Board approves the CP-KCS merger
4/14/23: CP officially closes the acquisition
of KCS and renames the combined
company “Canadian Pacific Kansas City”
6/28/23: CPKC hosts its
inaugural Investor Day as
a combined company
Average Cost at Announcement: C$91*
We believe re-privatization is an eventuality, but may take some time
Both entities continue to build capital through retained earnings from
the current base of $118 billion
Presidential election in November 2024 may be a catalyst
Share price rally since 2022 reflects optimism around a Trump / GOP win
In August, jury awarded damages to Fannie and Freddie junior preferred
holders, as well as Freddie common holders
Preferred to recover a mid-to-high-teens percentage of current market value
Freddie common damages equate to $0.05 per share, or 5% of market value
We do not expect litigation will be the catalyst to end conservatorship
in light of Supreme Court decisions on the issue
Modest victory in shareholder class action litigation
Fannie and Freddie remain valuable perpetual options on their
potential exit from conservatorship
51
Fannie Mae (“FNMA”) and Freddie Mac (“FMCC”)
Source: Company filings. This slide contains Pershing Square’s own views and opinions, based on publicly available information, to illustrate Pershing Square’s thinking on the matters therein.
$0
$1
$2
$3
$4
$5
$6
Oct-2013 Oct-2014 Oct-2015 Oct-2016 Oct-2017 Oct-2018 Oct-2019 Oct-2020 Oct-2021 Oct-2022 Oct-2023
FNMA FMCC
5/5/14: Pershing Square
presents investment thesis
at Ira Sohn conference
9/30/14: US District
Court ruling in Perry
litigation
11/8/16: Donald
Trump wins
presidential election
2/21/17 US Court of
Appeals ruling in
Perry litigation
1/18/19: Press reports
re. FHFA plan to end
conservatorships
9/6/19: Fifth Circuit
ruling in Collins
litigation that net
worth sweep was
beyond FHFA’s
statutory authority
1/14/21: Letter agreements
suspending net worth sweep
$1.02
$1.24
52
FNMA and FMCC Share Price Performance Since Inception
FNMA and FMCC share prices increased 203% and 141%, respectively, in
2023 and have increased 16% and 20%, respectively, year-to-date in 2024
(1)
FNMA and FMCC Share Price Performance from 10/7/2013 to 2/6/2024:
Share price
Note: The performance of FNMA’s and FMCC’s share prices is provided for illustrative purposes only and is not an indication of past or future returns of the Pershing Square funds. The graph above shows only FNMA’s and FMCC’s share
prices over time, not the value of PSH’s investment in FNMA and FMCC, and is provided as context for Pershing Square’s views of FNMA and FMCC. For a variety of potential reasons, such as timing of purchases and sales, use of derivative
instruments, and others, PSH’s return on its investment may differ substantially from FNMA’s and FMCC’s change in share prices. If PSH’s management fees, performance fees and fund expenses (calculated using PSH’s expense ratio for
each year except that for years prior to PSH’s inception, the expense ratio for PSLP was used) were applied to the ownership of a single share of FNMA and FMCC purchased at market price and held over the time period shown above, the
imputed net return on that share would be (52%) and (58%), respectively.
*Average cost at announcement date. Please see the additional disclaimers and notes to performance results at the end of the presentation.
(1) As of 2/6/2024.
Average Cost at
Announcement:
FNMA: $2.29*
FMCC: $2.14*
1/9/23: Supreme Court
denies certiorari in
Court of Federal
Claims litigation
6/23/21: Supreme Court
issues opinion in Collins
appeal, largely siding
with the government
against shareholders
Exited Positions
Ongoing transformation should drive strong long-term earnings growth
Attractive exit valuation in light of uncertain near-term earnings trajectory
Lowe’s successfully transformed its business
Volatile near-term industry conditions present a wider band of uncertainty and
additional downside risk to same-store sales
Less “low-hanging fruit” today to offset potential revenue declines
Market share gains in Pro and omnichannel
Five-year stacked U.S. same-store sales growth increased ~32% since 2018
Expanded operating profit margins +475bps (a 55% uplift)
Earnings increased ~2.5x vs. 2018 (~$5 of EPS to ~$13)
54
Lowe’s (“LOW”)
Pershing Square exited our investment after returns became less certain amidst the current
macroeconomic environment and a wider-than-typical distribution of outcomes
Lowe’s was a highly successful investment for Pershing Square,
generating $1.8bn of profits (Net: $1.3bn) for the funds
(1)
Source: Company filings. This slide contains Pershing Square’s own views and opinions, based on publicly available information, to illustrate Pershing Square’s thinking on the matters therein.
(1) Net profits are provided to comply with Rule 206(4)-1 under the Advisers Act and related Frequently Asked Questions issued by the SEC and reflects an adjustment for the (a) quarterly management fee, (b) expenses (calculated using the
expense ratio for the applicable time period), and (c) performance fee (if any) charged during relevant time period.
$50
$70
$90
$110
$130
$150
$170
$190
$210
$230
$250
$270
Apr-2018 Mar-2019 Feb-2020 Jan-2021 Dec-2021 Nov-2022 Oct-2023
Share price
55
LOW’s share price including dividends increased 175% from our average
cost at announcement date to our average sale price
(1)
LOW Share Price Performance Since Inception
LOW Share Price Performance From 4/6/2018 to 1/5/2024:
Note: The graph above shows LOW’s share price over time and is provided as context for Pershing Square’s investment in LOW. The change in LOW's share price does not reflect PSH’s return on its investment.
(1) Total returns for Lowe’s are calculated using the Pershing Square Funds’ average acquisition cost up to the date of the position’s announcement and the Pershing Square Funds’ weighted average sale price from trades made in FQ4’23 and
include dividends. If PSH’s management fees, performance fees and fund expenses (calculated using PSH’s expense ratio for each year) were applied to the ownership of a single share of LOW purchased at PSH’s average acquisition cost,
including dividends without reinvestment, and sold at PSH’s average sales price, the imputed net return on that share would be 111%. Please see the additional disclaimers and notes to performance results at the end of the presentation.
5/22/18: Lowe’s hires
Marvin Ellison as CEO
12/12/18: LOW 2018 Analyst
Day. Introduces 12%
operating margin target
12/9/20: LOW 2020 Analyst
Day. Medium-term operating
margin target set at 13%
11/3/22: LOW announces divesture of
Canadian business to improve focus and
simplicity; reveals core US margins are ~13.6%
12/7/22: LOW 2022 Analyst Day.
Demonstrates substantial
operational progress across
many fronts. Introduces
structural margin target of 15%
US Federal Reserve begins raising interest
rates, increases in mortgage rates ensue;
existing home sales fall precipitously
Average Cost at
Announcement: $86
(1)
Average Sale
Price: $221
(1)
Q&A
57
Additional Disclaimers and Notes to Performance Results
PSH NAV appreciation is calculated with respect to PSH’s Public Shares. Results are presented on a net-of-fees basis. Net returns include the reinvestment of all dividends, interest, and capital gains from
underlying portfolio companies and assume an investor has participated in any “new issues” as such term is defined under Rules 5130 and 5131 of FINRA. Net returns also reflect the deduction of, among other
things, management fees, brokerage commissions, administrative expenses and performance allocation/fees (if any). Performance is based on the dollar return for the specific period, including any and all
dividends paid by PSH, calculated from the beginning of such period to the end of such period. Where PSH’s performance is presented with that of PSLP, results also assume that an investor invested in PSLP at its
inception on January 1, 2004 and converted to PSH at its inception on December 31, 2012. Depending on the timing of an individual investor’s specific investment in PSH and/or PSLP, net performance for an
individual investor may vary from the net performance as stated herein. 2023 Performance data is estimated and unaudited. Past performance is not a guarantee of future results.
Total shareholder return for 2023 is calculated based on PSH’s Public Shares traded on Euronext Amsterdam. Over the same period, the total shareholder return for Public Shares listed in Sterling and USD on the
London Stock Exchange was 31.6% and 32.2%, respectively. Total shareholder return for Public Shares reflects USD-denominated returns and includes dividend reinvestment.
PSH’s total debt to capital ratio is calculated in accordance with the “Total Indebtedness to Total Capital Ratio” under the PSH Bonds’ Indentures. Under the Indentures, the “Total Capital” reflects the sum of PSH’s
NAV and its “Total Indebtedness”. Total Indebtedness reflects the total “Indebtedness” of PSH and any consolidated subsidiaries (excluding any margin debt that does not exceed 10% of the Company’s total
capital), plus the proportionate amount of indebtedness of any unconsolidated subsidiary or affiliated special investment vehicle. As defined in the Indenture, “Indebtedness” reflects indebtedness (i) in respect of
borrowed money, (ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof), representing capital lease obligations, (iv) representing the
balance deferred and unpaid of the purchase price of any property or services (excluding accrued expenses and trade payables in the ordinary course of business) due more than one year after such property is
acquired or such services are completed or (v) in respect of capital stock that is repayable or redeemable, pursuant to a sinking fund obligation or otherwise, or preferred stock of any of PSH’s future subsidiaries.
Indebtedness does not include, among other things, NAV attributable to any management shares or hedging obligations or other derivative transactions and any obligation to return collateral posted by
counterparties in respect thereto.
Since May 1, 2017, PSH has, from time to time, engaged in share repurchases whereby its buyback agent has repurchased Public Shares subject to certain limitations. Any positive impact on performance due to
these share buybacks is reflected herein.
In certain slides, PSLP’s net performance results are presented as it is the Pershing Square fund with the longest track record and substantially the same investment strategy to PSH. The inception date for PSLP is
January 1, 2004. PSLP’s net returns for 2004 were calculated net of a $1.5 million (approximately 3.9%) annual management fee and performance allocation equal to 20% above a 6% hurdle, in accordance with the
terms of the limited partnership agreement of PSLP then in effect. That limited partnership agreement was later amended to provide for a 1.5% annual management fee and 20% performance allocation effective
January 1, 2005. The net returns PSLP set out in this document reflect the different fee arrangements in 2004, and subsequently. In addition, pursuant to a separate agreement, in 2004 the sole unaffiliated limited
partner paid Pershing Square an additional $840,000 for overhead expenses in connection with services provided unrelated to PSLP which have not been taken into account in determining PSLP’s net returns. To
the extent such overhead expenses had been included in fund expenses, net returns would have been lower.
The market indices shown in this presentation have been selected for purposes of comparing the performance of an investment in PSH with certain broad-based benchmarks. The statistical data regarding these
indices has been obtained from Bloomberg and the returns are calculated assuming all dividends are reinvested. The S&P 500 Index, FTSE 100 Index, and MSCI World Index are not subject to any of the fees or
expenses to which PSH is subject, while the HFRX ED: Activist Index and HFRX Equity Hedge Fund Index are net of fees and expenses and reflect USD-denominated returns. The funds are not restricted to
investing in those securities which comprise any of these indices, their performance may or may not correlate to any of these indices and the portfolio of the funds should not be considered a proxy for any of these
indices. The volatility of an index may materially differ from the volatility of the Pershing Square funds’ portfolio. The S&P 500 is comprised of a representative sample of 500 U.S. large-cap companies. The index is
an unmanaged, float-weighted index with each stock's weight in the index in proportion to its float, as determined by Standard & Poors. The S&P 500 index is proprietary to and is calculated, distributed and
marketed by S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC), its affiliates and/or its licensors and has been licensed for use. S&P® and S&P 500® are registered trademarks of Standard & Poor's
Financial Services LLC. © 2023 S&P Dow Jones Indices LLC, its affiliates and/or its licensors. All rights reserved. PSH gained entry to the FTSE 100 Index (“FTSE 100”) in December 2020. The FTSE 100 is a
capitalization-weighted index of the 100 most highly capitalized companies traded on the London Stock Exchange. The equities use an investibility weighting in the index calculation. The MSCI World Index is a
broad global equity index that represents large and mid-cap equity performance across 23 developed markets countries, covering approximately 85% of the free float-adjusted market capitalization in each country.
The HFRX ED: Activist Index is composed of hedge fund strategies with greater than 50% of the portfolio in activist positions. Activist strategies included in the index may obtain or attempt to obtain representation
of the company's board of directors in an effort to impact the firm's policies or strategic direction and in some cases may advocate activities such as division or asset sales, partial or complete corporate divestiture,
dividend or share buybacks, and changes in management. The HFRX Equity Index is composed of hedge fund strategies typically investing at least 50% of the portfolio in long or short equity positions. Hedge Fund
Research, Inc. is the sponsor and the source of the information on HFRX indices provided in this presentation. The HFRX ED Activist Index and the HFRX Equity Index are being used under license from Hedge
Fund Research, Inc., which does not approve of or endorse the contents of this presentation.
Pages 24-25 of this presentation reflect the contributors and detractors to the performance of the portfolio of PSH. Other than share buyback accretion and bond interest expense, positions with contributions or
detractions to performance of 50 basis points or more are listed separately, while positions with contributions or detractions to performance of less than 50 basis points are aggregated. The Gross Contributors and
Gross Detractors to performance presented herein are based on gross returns which do not reflect deduction of certain fees or expenses charged to PSH, including, without limitation, management fees and
accrued performance allocation/fees (if any). Inclusion of such fees and expenses would produce lower returns than presented in those columns. The Net Contributors and Net Detractors columns reflect an
adjustment to the gross return of each investment for such investment’s allocable portion of PSH’s performance fee and quarterly management fee, based on PSH’s exposure to such investment. In addition, at
times, Pershing Square may engage in hedging transactions to seek to reduce risk in the portfolio, including investment-specific hedges that do not relate to the underlying securities of an issuer in which PSH is
invested. For each issuer, the returns (i) include only returns on the investment in the underlying issuer and the hedge positions that directly relate to the securities that reference the underlying issuer (e.g., if PSH
was long Issuer A stock and also purchased puts on Issuer A stock, the return reflects the profit/loss on the stock and the profit/loss on the put); (ii) do not reflect the cost/ benefit of hedges that do not relate to the
securities that reference the underlying issuer (e.g., if PSH was long Issuer A stock and short Issuer B stock, the profit/loss on the Issuer B stock is not included in the returns attributable to the investment in Issuer
A); and (iii) do not reflect the cost/ benefit of portfolio hedges. Performance with respect to currency hedging related to a specific issuer is included in the overall performance attribution of such issuer. For all other
currency derivatives, the long/short classification is determined by the non-USD leg of the derivative. For example, a long USD call/GBP put option position would be considered a short exposure, and a long USD
put/GBP call option would be considered a long exposure. The contributors and detractors to returns presented herein are for illustrative purposes only. The securities on this list may not have been held by PSH
for the entire calendar year. All investments involve risk including the loss of principal. It should not be assumed that investments made in the future will be profitable or will equal the performance of the securities
on this list. Past performance is not indicative of future results.
58
Additional Disclaimers and Notes to Performance Results
Share price performance data for a portfolio company reflects the reinvestment of the issuer’s dividends, if any. Share price performance data is provided for illustrative purposes only and is not an indication of
actual returns of PSH over the periods presented or future returns of PSH. Additionally, it should not be assumed that any of the changes in shares prices of the investments listed herein indicate that the
investment recommendations or decisions that Pershing Square makes in the future will be profitable or will generate values equal to those of the companies discussed herein. All share price performance data
calculated “to date” is calculated through February 6, 2024.
Average cost basis is determined using a methodology that takes into account not only the cost of outright purchases of stock (typically over a period of time) but also a per share cost of the shares underlying
certain derivative instruments acquired by Pershing Square to build a long position. "Average Cost" reflects the average cost of the position that has been built over time as of the “Announcement Date” which is
the date the position was first made public and does not reflect the cost of acquisitions after the Announcement Date, if any.
The average cost basis for long positions has been calculated based on the following methodology:
(a) the cost of outright purchase of shares of common stock is the price paid for the shares on the date of acquisition divided by the number of shares purchased;
(b) the cost of an equity swap is the price of the underlying share on the date of acquisition divided by the number of underlying shares;
(c) the cost of an equity forward is the reference price of the forward on the date of acquisition divided by the number of underlying shares;
(d) the cost of call options that were in the money at the time of announcement is (except when otherwise noted) (i) the option price plus the strike price less any rebates the Pershing Square funds would receive
upon exercise divided by (ii) the number of shares underlying the call options;
(e) call options that are out of the money at the time of announcement are disregarded for purposes of the calculation (i.e., the cost of the options acquired are not included in the numerator of the calculation and
the underlying shares are not included in the denominator of the calculation);
(f) the cost of shares acquired pursuant to put options sold by the Pershing Square funds, where the underlying stock was put to the Pershing Square funds prior to the time of announcement, is (i) the strike price
of the put options paid when the shares were put to the Pershing Square funds less the premium received by the Pershing Square funds when the put was sold divided by (ii) the number of shares received upon
exercise of the put options; and
(g) premium received from put options written by the Pershing Square funds where the underlying stock was not put to the Pershing Square funds, and the option was out-of-the money at the time of announcement
are included in the numerator of the calculation.
Certain positions have been selected as illustrative examples of Pershing Square’s investment and/or hedging style. It should not be assumed by the presentation of any position herein that the position was or will
prove to be profitable, or that the investment recommendations or decisions Pershing Square makes in the future will be profitable or will equal the investment performance of the positions discussed herein.
Past performance is not necessarily indicative of future results. All investments involve the possibility of profit and the risk of loss, including the loss of principal. This presentation does not constitute a
recommendation, an offer to sell or a solicitation of an offer to purchase any security or investment product. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in
making an investment or other decision. All information is current as of the date hereof and is subject to change in the future.
Certain performance information herein reflects the returns an investor would have earned if it invested in PSLP at its January 1, 2004 inception and converted to PSH as its launch on December 31, 2012. Such
performance information does not reflect either the performance of PSLP since its inception or PSH since its inception and no individual fund has actually achieved these results. The information is presented to
illustrate how Pershing Square's core strategy has performed over a longer time horizon beyond the inception of PSH and is not necessarily, and does not purport to be, indicative, or a guarantee, of future results.
This performance provided is calculated based on certain inputs and underlying assumptions, but not all considerations may be reflected therein and such performance is subject to various risks and inherent
limitations that are not applicable to the presentation of the performance of either PSH or PSLP alone. Although Pershing Square believes the performance calculations described herein are based on reasonable
assumptions, the use of different assumptions would produce different results. The performance set forth in these materials is provided to you on the understanding that you will understand and accept the
inherent limitations of such results, will not rely on them in making any investment decision with respect to an investment with Pershing Square, and will use them only for the purpose of discussing your
preliminary interest in making an investment with Pershing Square.
It should not be assumed that there will be a correlation between the performance herein and any future returns. No representation is being made that any fund or account will or is likely to achieve profits or losses
similar to that being shown. Pershing Square may or may not, in its sole discretion, make similar investments as the investments that form the basis of the performance herein. There can be no assurance that
Pershing Square will achieve results comparable to those of any prior or existing fund or product managed by Pershing Square or its management team. Nothing herein shall be deemed to limit the investment
strategies or investment opportunities to be pursued by Pershing Square. Prospective investors are urged to consider the information contained herein in conjunction with the offering materials of the fund and
other materials provided by Pershing Square, and are encouraged to ask questions of Pershing Square and to conduct further due diligence.
Forward-Looking Statements
This presentation also contains forward-looking statements, which reflect Pershing Square’s views. These forward-looking statements can be identified by reference to words such as “believe”, “expect”,
“potential”, “continue”, “may”, “will”, “should”, “seek”, “approximately”, “predict”, “intend”, “plan”, “estimate”, “anticipate” or other comparable words. These forward-looking statements are subject to various
risks, uncertainties and assumptions. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Should any
assumptions underlying the forward-looking statements contained herein prove to be incorrect, the actual outcome or results may differ materially from outcomes or results projected in these statements. None of
the Pershing Square funds, Pershing Square or any of their respective affiliates undertakes any obligation to update or review any forward-looking statement, whether as a result of new information, future
developments or otherwise, except as required by applicable law or regulation.
59
Additional Disclaimers and Notes to Performance Results
An investment in PSH will entail substantial risks, including, but not limited to, those listed below, and a prospective investor should carefully consider the following summary of certain risk factors below:
Speculative Investment and High Degree of Risk. The investment strategies PSH pursues are speculative and entail substantial risks. Investors should be prepared to bear a substantial loss of capital. There can
be no assurance that the investment objectives of PSH will be achieved.
Relevance of Past Performance. There can be no assurance that PSH will realize returns comparable to those achieved by PSH, any Pershing Square fund or Pershing Square, in the past.
Business and Regulatory Risks of Funds. Legal, tax and regulatory changes could occur and may adversely affect PSH. Pershing Square and PSH may be the subject of litigation or regulatory investigation.
Concentration of Investments. PSH may accumulate significant positions in particular investments and PSCM intends to invest the substantial majority of PSH’s capital in typically 8 to 12 core investments.
Concentrating investment positions increases the volatility of investment results over time and may exacerbate the risk that a loss in any such position could have a material adverse impact on PSH’ s assets, and,
in turn, the value of any investment in PSH.
Engaged Investing. Engaged investment strategies may not be successful. They may result in significant costs and expenses. PSCM may pursue an activist role and seek to effectuate corporate, managerial or
similar changes with respect to an investment. The costs in time, resources and capital involved in such activist investments depend on the circumstances, which are only in part within PSCM’s control, and may
be significant, particularly if litigation against PSCM and/or PSH ensues. In addition, the expenses associated with an activist investment strategy will be borne by the applicable Pershing Square fund. Such
expenses may reduce returns or result in losses.
Derivatives, Hedging, and Currency. PSH may invest in derivative instruments or maintain positions that carry particular risks. PSH has in the past and may continue to use derivative instruments as a means of
hedging its investments or as a means to gain market exposure, and may also use various derivative instruments, including futures, forward contracts, swaps and other derivatives, which may be volatile and
speculative. Certain positions may be subject to wide and sudden fluctuations in market value. Short selling exposes PSH to the risk of theoretically unlimited losses. Derivatives used for hedging purposes may
not correlate strongly with the underlying investment sought to be hedged. Derivative instruments may not be liquid in all circumstances. Derivatives may not be available to PSH upon acceptable terms. As a
result, PSH may be unable to use derivatives for hedging or other purposes. Non-U.S. currency investments may be affected by fluctuations in currency exchange rates.
Investment Opportunities. PSH’s investment strategy depends on the ability PSCM to successfully identify attractive investment opportunities. Any failure to identify appropriate investment opportunities and
make appropriate investments would increase the amount of PSH’s assets invested in cash or cash equivalents and, as a result, may reduce their rates of return. PSH will face competition for investments. There
can be no assurance that Pershing Square will be able to identify and make investments that are consistent with PSH’s investment objectives.
Control Investments. The Pershing Square funds may take a controlling stake in certain companies. These investments may involve a number of risks, such as the risk of liability for environmental damage,
product defect, failure to supervise management, violation of governmental regulations and other types of liability. In connection with the disposition of these investments, the Pershing Square funds may make
representations about such investments’ business and financial affairs and may also be required to indemnify the purchasers of such investments or underwriters to the extent that any such representations turn
out to be incorrect, inaccurate or misleading. All of these risks or arrangements may create contingent or actual liabilities and materially affect the Pershing Square funds and any investment in the Pershing
Square funds. Pershing Square may participate substantially in the affairs of portfolio companies, which may result in PSH’s inability to purchase or sell the securities of such companies.
THIS GENERAL INVESTMENT FUND RISK DISCLOSURE IS NOT COMPLETE. THE ABOVE SUMMARY IS NOT A COMPLETE LIST OF THE RISKS AND OTHER IMPORTANT DISCLOSURES INVOLVED IN INVESTING
IN PSH AND IS SUBJECT TO THE MORE COMPLETE DISCLOSURES CONTAINED IN PERSHING SQUARE’S FORM ADV PART 2A AND IN PSH’S PROSPECTUS, WHICH MUST BE REVIEWED CAREFULLY.
Additionally, investors should be aware:
• PS Holdings Independent Voting Company Limited controls a majority of the voting power of all of PSH’s shares;
• PSH shares may trade at a discount to NAV and their price may fluctuate significantly and potential investors could lose all or part of their investment; and
• PSH is dependent on William A. Ackman.
