Bill Ackman targets Main Street investors with new Pershing fund

Hopes are high for the proposed vehicle, which 'has the potential to be one of the largest closed-end funds,' according to the prospectus filed with the SEC.

Hedge fund mogul Bill Ackman is looking to meet individual American investors where they are with his next investment fund.

The Pershing Square USA Ltd. fund – which still awaits regulatory approval – is set to be listed on the New York Stock Exchange under the ticker PSUS.

Structured as a closed-end fund, it aims to invest in a mix of 12 to 24 large-cap and “durable growth” core holdings focused on the North American market, according to a prospectus filed with the SEC.

Ackman has built a reputation for achieving market-beating returns by running concentrated portfolios. The star investment manager’s hedge fund, Pershing Square Capital Management, ended last year with a 26.7% return, while holding only seven stocks, including Google parent Alphabet, Chipotle Mexican Grill and Universal Music Group.

While it posted a loss of 8.8% in 2022, the fund still managed to beat the market as the S&P 500 suffered a near-20% drawdown for the year.

“The Adviser believes that the Fund has the potential to be one of the largest, if not the largest, listed closed-end funds and expects that the Adviser’s brand-name profile and broad retail following will drive substantial investor interest and liquidity in the secondary market,” the filing says.

While hedge funds have typically come with a 2-and-20 fee structure – a 2% management fee charged on assets invested and a 20% fee on profits a given fund generates – Ackman says he will be waiving the management fee for his Main Street fund during its first year, after which a 2% fee will be charged annually.

As noted by the Wall Street Journal, a similar fund, Pershing Square Holdings, is also available to investors across the pond via European stock exchanges. Just over three years ago, Ackman launched Pershing Square Tontine Holdings in a high-profile SPAC IPO that drew $4 billion from investors. That SPAC was poised to gain a minority stake in Universal Music Group at one point, but the deal fell through in the face of opposition from the SEC.

Ackman’s net worth stands at approximately $4.2 billion according to Forbes, making him the world’s 698th richest person.