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Weekly NAV update - discount to NAV now stretched to 34%! The NAV has recovered 15% since it's dip following Ukraine invasion. It's now -2.2% down YTD 2022, up from -16.8% 2 weeks ago.
Compelling value and while the parabolic bet on interest rates was reduced by 90% to buy Netflix it's nevertheless over $120m and has potential to drive a significant chunk of 2022 earnings.
As of Date Period USD
NAV/Share Euronext
Price/Share GBP
NAV/Share LSE GBP
Price/Share LSE USD
Price/Share MTD
Return QTD
Return YTD
Return
22 March Weekly $55.96 $37.00 £42.20 £27.95 $37.08 10.1% -2.2% -2.2%
If I had to guess I’d say Bill’s target is Square (SQ):
1. Square moved into value territory dropping $166 to $106 a share over past 6 months
2. Merge with BNPL business Afterpay
3. Strong brand
4. Covers Retail/POS payments, e-commerce gateway payments and and crypto digital wallets
9th / 10th Feb
https://twitter.com/BillAckman
@trader where? Not on Twitter he hasn't, I follow him and checked his tweets back over the past 4 months, absolutely zilch.
Just throwing it out there, but could it be Crypto?
Ackman's been tweeting about Bitcoin recently
Did anyone see on the investor day presentation on Friday 11th there was a mention of an udisclosed position in the slides. It was in 2021 so i am a bit confused unless they have been building it since laste 2021. Any thoughts?
NAV @ 8th Feb £38.82 per share. So currently at today's price of £27.30 on a 29.6% discount to NAV for a slice of Dominos USA, a watch of Netflix, a listen of Universal Music and a bit of DIY from Lowes. Plus what Bill Ackman calls an asymmetric bet on interest rates. It's asymmetric because if rates go up further and faster then the swaption is disproportionately more valuable. The last time US inflation was 7.5%, interest rates were 15% so we'll see on that one.
Baptista Research puts Netflix on a current target price of $505 (40% upside from PSH buy price) and sees Net Profit growth of 60% over the next 3 years. Discussed how Netflix is moving into merchandising and gaming as well as growing into international markets. Notes strong competition, however Netflix's originals as a source of differentiation.
Ive got Netflix + Amazon. TBH after 3 months of Amazon enough is enough. You need to pay for some films, some are just subtitled. B2B comparison, Netflix is superior both in content and user interface. Apologies for the slight off topic.
Great move by PSH
"Buy Low" says John Burford on a fibonacci 50% retracement:
https://www.ii.co.uk/secure/my-news-feed/analysis-commentary/chart-week-netflix-shares-are-half-price-should-you-buy-ii522739
Interesting point: at what point does a growth stock become a value stock? It reduced from a future PE of 76 to 38.
Doing a Peter Lynch: I don't rate either Disney or Amazon's offerings, while Sky (Comcast) is pretty good, I think Netflix genuinely beats the other streaming services right now, or at least is competitive. The question may come over whether they go into Gaming too?
Sorry been at work all day but back in as Goldman said buy the dips yesterday (waited untill this morning of course). I agree but market sentiment is against all things American at the moment. It's all about p/e and profit margin at the momnt. JMHO Netflix under pressure from Amazon prime - but both my favourite TV channels which says a hell of a lot about things have chnaged since BBC ruled the waves of the sea of quality (maybe 2-3 years ago).
Genius move - Netflix was trading at $700/share back in November so PSH have scooped up 3.1m shares ($1.2bn) at around $360/share - nearly half price! It is utterly baffling that there's a pivot from growth to value and here is a FTSE100 hedge fund which has 96% of its portfolio in value companies, at 35% below nav. The fact that it's 7pm and not a single comment on this news just shows how overlooked this is at the moment!
https://assets.pershingsquareholdings.com/2022/01/26170421/Pershing-Square-Capital-Management-L.P.-Releases-Letter-to-Investors-01-26-2022.pdf
Heavily discounted still, great buying opportunity IMO.
I think with market volatility this year the results end of March may be just as good as last year. Not too sure on the 10% fixed charge is high compared to most competitors but if they’re making a nice multiple then I guess nobody with scrutinise this until it changes.
Z-Score -2.2
This means its discount is well below its "usual" level of discount.... in other words it's relatively cheap! Discount to NAV is 30.9% and above its average of 26.2% while its lowest was around 17%. Much of the discount is down to it being "complex" and "opaque". The bit that is perhaps opaque is that disclosure is limited - weekly NAV updates and 6 monthly letters.
Quality exposure: Each of the 7 US firms are quality recovery buys at attractive levels
Swaptions value: See my earlier analysis on the value if the Fed raises interest rates to 1% (as seems likely) = £6 per share or 20% upside.
Dividend: 1%
Does PSH have history of Buy Backs and closing the discount? Yes.
Could PSH be a hedge in the case of a crash in 2022? Possibly - it's done this in 2020.
Conclusion: The FTSE100 is said to be stuffed full of "old industry" stalwarts. PSH is the exception then. Ackman has an amazing (although not blemish free) track record. There's upside here, but also there's limits to downside. And the swaptions give a play on increasing interest rates. I am less clear now on the direction of 2022. PSH gives me a profitable pathway for several themes which could happen.
I found the video a bit vague because Bill mentions "a few billion dollars", "3x return" and "a $100 billion".
My interpretation is that PSH currently have earned a $600m/£450m return so far. If interest rates move up to say 1-2% then that will be worth a further $2bn/£1.5bn (i.e. 20% uplift of NAV so £6 a share uplift)..... and if interest rates go to say 15% then that's worth $100bn/£75bn i.e. £300 a share (10 bagger).
A FTSE100 ten bagging would sure be something! But the chances of a sharp increase in interest rates, is unlikely in my opinion (indebted governments wouldn't allow).
Barron’s
“Pershing Square Holdings is favored by Bryn Torkelson, the chief investment officer of Matisse Capital. Matisse runs the Matisse Discounted Closed-End Fund Strategy (MDCEX), which invests in cheaply valued closed-end funds. Pershing Square Holdings is the largest investment in the $350 million fund that has returned about 20% so far in 2021.
Ackman is a premier manager and he gets a 27% discount. It’s kind of crazy,” Torkelson says. Ackman is coming off two phenomenal years in 2019 and 2020, when Pershing Square Holdings returned 70% in 2020 based on its NAV after gaining 58% in 2019.“
UMG our largest position (I think) is over 3% up today
Sorry, I missed this ! Cheers
This will serve PSH well in our NAV, does anyone know the details of how it works and current value ?
Filled my boots on Friday.
Bought more here, well below NAV and a defensive play in current markets
I'd love to know who bought £26m of shares.
Nice little perk up before the bell
Hedge already worth over 1 billion dollars, 6x cost.
Very nice to hear :)
https://youtu.be/qRWH-ZaMTM4
5 minute interview with Bill Ackman where he explains the latest hedge for the fund.