Pershing Square Holdings, Ltd. Public Class USD Accum.Shs · LSE:PSH
Pershing Square Holdings, Ltd. Public Class USD Accum.Shs — Pershing Square Holdings — Investor Presentation (February 2021)
57 slides from Pershing Square Holdings, Ltd. Public Class USD Accum.Shs's investor presentation, Feb 18, 2021
Slide 1: Annual Investor Presentation
Annual Investor Presentation February 18, 2021
Slide 2: Disclaimer
Disclaimer All information provided herein is for informational purposes only and should not be deemed as a recommendation to buy or sel l any security mentioned. Pershing Square Capital Management, L.P. (“Pershing Square”) believes this presentation contains a balanced presentation of the performan
Slide 3: Agenda
Agenda Chairman’s Introduction 2020 PSH Performance Review Business & Organizational Update Portfolio Update Q&A 3
Slide 4: Chairman's Introduction
Chairman’s Introduction
Slide 5: Board of Directors of PSH
Board of Directors of PSH All directors are independent of Manager other than Nicholas Botta Board Director Summary Experience ‾ Director BlueRiver Acquisition Corp. Anne Farlow ‾ Former Director Investec Asset Management Independent Director ‾ Former Partner, Providence Equity Partners, Electra Pri
Slide 6: PSH Board Process
PSH Board Process Quarterly meetings; additional meetings as needed Board Committees (membership limited to independent directors except for risk committee) Audit Committee Management Engagement Committee Nomination Committee Remuneration Committee Risk Committee Review and Monitor
Slide 7: PSH Board Additional Matters Considered in 2020
PSH Board Additional Matters Considered in 2020 Share repurchases Dividend policy COVID impact on portfolio and operations of investment manager Q1 2020 CDS hedge position Pershing Square Tontine Holdings, Ltd. (SPAC) Bond issuances FTSE 100 inclusion 7
Slide 8: Overview of 2020 Performance
Overview of 2020 Performance 2020 was an outstanding year for PSH with NAV appreciation of 70.2% and a total shareholder return of 84.8%1 PSH NAV Performance, PSH and S&P 500 Total Shareholder Return and Discount to NAV | 12/31/2019 – 12/31/2020: 100% (22.0%) 80% (26.0%) 60% % Discount to NAV Perfor
Slide 9: 2020 Corporate Actions: New Bond Issuances
2020 Corporate Actions: New Bond Issuances In 2020, PSH completed two new bond issuances, raising a total of $700 million in additional capital at highly attractive interest rates PSH Capital Structure As of ($ in mm) 2/16/2021 Total Assets $11,887 Coupon Maturity Issue Date 2022 Bonds (Public Offer
Slide 10: PSH Total Debt to Total Assets Ratio
PSH Total Debt to Total Assets Ratio In periods of market and/or portfolio volatility, PSH has continuously maintained conservative leverage levels and investment grade ratings Total Debt to Total Assets Ratio | 6/30/2015 to 2/16/2021: 24.0% 7/25/19: Private placement of $400mm 11/2/20: Issued $500m
Slide 11: Long-Term Debt Financing Strategy
Long-Term Debt Financing Strategy Our ability to access low-cost, investment grade, long-term debt is an important competitive advantage for PSH ✓ PSH has attractive credit characteristics Simple, transparent and highly liquid investment portfolio Significant asset coverage: PSH debt is covered
Slide 12: 2020 Corporate Actions: Return of Capital
2020 Corporate Actions: Return of Capital In 2020, PSH returned $367 million of capital through its quarterly dividend and opportunistic share buybacks Continued quarterly dividend Quarterly dividend of $0.10 per share, a 1.1% yield at the current PSH share price1 $81 million of capital return
Slide 13: 2020 Corporate Actions: Share Buyback Programs
2020 Corporate Actions: Share Buyback Programs Over the course of 2020, PSH repurchased $286 million in stock Cumulative Shares 2020 Share Buybacks Repurchased Since Inception $ Shares Repurchased $286 million $837 million Number of Shares Repurchased 13.7 million 50.8 million as % of Public Shares
Slide 14: Inclusion in the FTSE 100 Index
Inclusion in the FTSE 100 Index Because of strong NAV and stock price performance, PSH was added to the FTSE 100 index on December 21, 2020 The FTSE 100 index seeks to represent the 100 largest companies listed on the London Stock Exchange Inclusion in the FTSE 100 index is a materially positive
Slide 15: PSH Service Providers
PSH Service Providers Investment Manager Pershing Square Capital Management, L.P. Jefferies International Limited Corporate Broker Corporate broker, advisor, buyback agent and sponsor for LSE listing Administrator Northern Trust (as of August 1, 2020) Legal Counsel Herbert Smith Freehills Auditors E
Slide 16: 2020 Performance Review
2020 Performance Review
Slide 17: Record Outperformance in 2020
Record Outperformance in 2020 1 2020 PSH Net Return vs. Benchmark Indices 70.2% 18.4% 16.5% 18.1% 4.6% PSH S&P 500 MSCI World HFRX ED: Activist HFRX Equity Hedge Fund Index1 Fund Index2 PSH Outperformance 5,180 bps 5,370 bps 5,210 bps 6,560 bps Past performance is not necessarily indicative of futur
Slide 18: PSLP / PSH Annual Net Returns
Pershing Square L.P. (“PSLP”) / PSH Annual Net Returns PSH’s 70.2% net return in 2020 is the highest since inception of the strategy and the sixth year with net returns of 39% or more (on average, every third year) Annual Net Returns Year S&P 500 PSLP / PSH 2004 10.9% 42.6% 2005 4.9% 39.9% 2006 15.8
Slide 19: PSLP / PSH Cumulative Net Returns Since Inception
PSLP / PSH Cumulative Net Returns Since Inception (1/1/04) PSLP / PSH Net Returns vs. S&P 500 through December 31, 2020 1,400% PSLP / PSH: Launch of PSH 1,330% 1,300% December 31, 2012 1,200% 1,100% 1,000% 900% 800% 700% 600% 500% 400% S&P 500: 377% 300% 200% 100% 0% (100%) Data represents returns a
Slide 20: 2020 Contributors (Gross Returns)
2020 Contributors (Gross Returns) Contributors PSH Index CDS 36.6% Pershing Square Tontine Holdings 13.1% Lowe's 10.7% Chipotle Mexican Grill 10.2% Starbucks 7.6% Agilent Technologies 7.2% Restaurant Brands International 3.0% Hilton Worldwide 2.7% Accretion from Share Buybacks1 2.4% Total Contributo
Slide 21: 2020 Detractors (Gross Returns)
2020 Detractors (Gross Returns) Detractors PSH Berkshire Hathaway (3.1%) Fannie Mae & Freddie Mac (2.5%) Bond Interest Expense (1.5%) All Other Positions & (0.6%) Other Income and Expense Total Detractors (7.7%) Past performance is not a guarantee of future results. All investments involve risk, inc
Slide 22: Strategy Has Proven Defensive in Down Markets
Pershing Square’s Strategy Has Proven to be Defensive in Down Markets PSLP / PSH Average Monthly Net Returns vs. S&P 500 through December 31, 2020 Average Monthly Average Return in Average Return in Return Up Months Down Months 4.0% 2.9% 3.0% 3.0% 2.0% 1.4% 0.9% 1.0% 0.0% (1.0%) (2.0%) (1.8%) (3.0%)
Slide 23: Strong Performance During the Global Financial Crisis
Strong Performance During the Global Financial Crisis During the Global Financial Crisis, from December 2007 to June 2009 1, PSLP outperformed the S&P 500 by 3,200 basis points PSLP Indexed Net Return vs S&P 500 | 11/30/2007 to 6/30/2009: 20% March 2009 peak losses: S&P 500: 52.9% 10% PSLP: 18.2% 0%
Slide 24: Strong Performance During the COVID Crisis
Strong Performance During the COVID Crisis PSH delivered strong 2020 performance with a net return of 70.2%, outperforming the S&P 500 by 5,180 basis points PSH Indexed Net Return vs S&P 500 | 12/31/2019 to 12/31/2020: 80% 70% March 2020 peak losses: 70.2% S&P 500: 30.4% 60% PSH: 11.2% 50% 40% Retur
Slide 25: Total Assets Under Management
Total Assets Under Management As of 2/16/2021 ($ in millions) Total AUM 1 Equity AUM 1 Pershing Square Holdings ("PSH") $12,027 $9,927 Pershing Square, L.P. ("PSLP") 997 997 Pershing Square International ("PSI") 538 538 Total Core Funds $13,562 $11,462 Assets under management are gross of accrued pe
Slide 26: Business and Organizational Update
Business and Organizational Update
Slide 27: 2020 Key Developments
2020 Key Developments Our ability to act quickly and decisively on key insights throughout the year resulted in the strongest annual returns in Pershing Square’s history ✓ Initiated a hedging program in the index CDS markets in late February ✓ Invested hedging gains at deeply discounted prices ✓ Lau
Slide 28: Overview of CDS Index Hedging Program
Overview of CDS Index Hedging Program In late February, we acquired large notional CDS index hedges to protect our portfolio against losses in a severe market decline CDS Index Hedge Summary (2/24 - 3/23)1 Notional Avg. Entry Avg. Exit CDS Index Reference Securities ($ mm) Spread (bps) Spread (bps)
Slide 29: CDS Index Hedges Offered Asymmetric Upside
CDS Index Hedges Offered Asymmetric Upside Initiating the hedges 1 when they were trading near all-time tight levels offered an asymmetric profit opportunity with limited potential for losses CDS Index Spread Levels | 1/1/2008 to 4/30/2020: 300 2000 1750 250 CDX IG / ITRAXX MAIN Spread Level 1500 2/
Slide 30: Unwind of CDS Index Hedges
Unwind of CDS Index Hedges By mid-March, our CDS index hedges 1 had appreciated substantially in value and, along with cash, represented 49% of NAV Market Value of PSH Assets by Position | 2/3/2020 to 3/12/2020: % of NAV $8,000 as of 3/12/20 $7,000 15% Market Value ($ in mm) $6,000 34% $5,000 3/12/2
Slide 31: Redeployment of Hedging Gains
Redeployment of Hedging Gains Immediate reinvestment of hedging gains allowed us to increase our exposure to high-quality businesses we understood well at deeply discounted prices Summary of Reinvested Hedging Gains (3/12/20 – 4/3/2020) Capital Invested Realized & Unrealized Position Cumulative Retu
Slide 32: Pershing Square Tontine Holdings (PSTH)
Pershing Square Tontine Holdings (“PSTH”) In July, PSCM launched Pershing Square Tontine Holdings (“PSTH”), the world’s largest special purpose acquisition company (“SPAC”) Publicly traded company with $5 billion to $7 billion of equity capital Raised $4 billion in its July 22nd IPO on the New Yor
Slide 33: PSTH Price Performance Since IPO
PSTH Price Performance Since IPO Including pro-rata distributed warrants, PSTH appreciated 44% from its IPO through December 31, 2020, and increased 21% year-to-date in 20211 PSTH price performance from 7/21/2020 to 2/16/2021: $36 $35 $34 7/21/20: PSTH prices IPO 9/11/20: Each PSTH unit $32 at $20.0
Slide 34: Organizational Update
Organizational Update Highly resilient and focused organization seamlessly navigated the impact of COVID-19 with no business disruption Seamless transition to a virtual work environment Entire team of 39 employees has been working from home office set-ups since late February 2020 Coordinated w
Slide 35: Pershing Square Organization
Pershing Square Organization 35
Slide 36: Pershing Square Investment Team
Pershing Square Investment Team Career PSCM Employee Education and Summary Prior Experience Experience Tenure (Years) (Years) Gotham Partners, Co-Founder and Portfolio Manager (1992 - 2003) Bill Ackman M.B.A., Harvard Business School, 1992 29 17 CEO / Portfolio Manager A.B., Harvard College, magna c
Slide 37: Portfolio Update
Portfolio Update
Slide 38: Lowe's (LOW)
Lowe’s (“LOW”) Lowe’s is a high-quality business with significant long-term earnings growth potential COVID crisis significantly boosted Lowe’s business Unprecedented demand across the sector driven by consumer nesting, higher home asset utilization and a reallocation of discretionary spend Crit
Slide 39: LOW Share Price Performance Since Inception
LOW Share Price Performance Since Inception LOW’s share price including dividends increased 36% in 2020 and increased 9% year-to-date in 20211 LOW share price performance from 4/6/2018 to 2/16/2021: $180 8/19/20: Lowe’s reports Q2 results, including 35% $174 same-store sales $165 5/20/20: Lowe’s rep
Slide 40: Chipotle Mexican Grill (CMG)
Chipotle Mexican Grill (“CMG”) Management’s successful business transformation enabled Chipotle to return to growth only three months after the pandemic’s onset Digital has powered Chipotle’s sales growth back to pre-COVID levels Same-store sales grew 6% last quarter, or 20% on a two-year stacked
Slide 41: CMG Share Price Performance Since Inception
CMG Share Price Performance Since Inception CMG’s share price increased 66% in 2020 and increased 7% year-to-date in 20211 CMG share price performance from 8/4/2016 to 2/16/2021: $1,600 4/21/20: CMG holds $1,484 $1,400 Q1’20 earnings call, 9/6/16: Pershing Square noting peak digital files 13D after
Slide 42: Agilent (A)
Agilent (“A”) Agilent’s resilient results through the COVID crisis are demonstrative of its durable business model and significant margin expansion opportunity Revenue growth and improved profitability under a challenging backdrop Delivered 1% organic growth and increased EBIT margins by 20bps in
Slide 43: Agilent Share Price Performance Since Inception
Agilent Share Price Performance Since Inception Agilent’s share price including dividends increased 40% in 2020 and increased 8% year-to-date in 20211 A share price performance from 9/4/2019 to 2/16/2021: 12/9/20: Agilent hosts Analyst Day and $130 raises long-term revenue growth and margin expansio
Slide 44: Hilton Worldwide (HLT)
Hilton Worldwide (“HLT”) Hilton’s superb management team and unique asset-light business model enabled the company to navigate extraordinary market conditions COVID triggered an unprecedented industry shock Worldwide lockdowns and stay-at-home restrictions catalyzed a precipitous drop- off in hote
Slide 45: HLT Share Price Performance Since Inception
HLT Share Price Performance Since Inception HLT’s share price including dividends was flat in 2020 and increased 2% year-to-date in 20211 HLT share price performance from 10/8/2018 to 2/16/2021: $120 2/13/19: HLT reports 10/23/19: HLT strong earnings and issues preliminary 6/16/20: Hilton announces
Slide 46: Restaurant Brands International (QSR)
Restaurant Brands International (“QSR”) QSR’s high-quality franchised business model enabled it to navigate extraordinary market conditions while maintaining its long-term growth potential Management undertook decisive actions to strengthen the business Supported franchisees with deferrals and liq
Slide 47: QSR Share Price Performance Since Inception
QSR Share Price Performance Since Inception QSR’s share price including dividends decreased 1% in 2020 and decreased 3% year-to-date in 20211 QSR share price performance from 6/19/2012 to 2/16/2021: $80 1/23/19: QSR announces leadership transition, elevating Daniel Schwartz to $70 Executive Chairman
Slide 48: Howard Hughes Corporation (HHC)
Howard Hughes Corporation (“HHC”) HHC’s transformation into a leaner and more focused organization enabled the company to successfully navigate the impact of COVID Acted quickly and decisively to stabilize the business Raised $600mm of equity in March 2020 to strengthen the balance sheet ▪ Pershin
Slide 49: HHC Share Price Performance Since Inception
HHC Share Price Performance Since Inception HHC’s share price decreased 38% in 2020 and increased 26% year-to-date in 20211 HHC share price performance from 11/9/2010 to 2/16/2021: 10/21/19: HHC Board $170 6/27/19: HHC announces its concludes review Board of Directors will be process and announces c
Slide 50: Starbucks (SBUX)
Starbucks (“SBUX”) SBUX is already nearing a full sales recovery and should be a major beneficiary of a reopened global economy Outstanding recent performance despite severe headwinds from COVID U.S. same-store sales declined only 5% last quarter and 2% in January ▪ Successful migration of custome
Slide 51: SBUX Share Price Performance Since Inception
SBUX Share Price Performance Since Inception SBUX’s share price including dividends increased 80% from our average cost at re-establishment of the position in March 2020 to December 31, 2020 and decreased 1% year-to-date in 20211 SBUX share price performance from 7/13/2018 to 2/16/2021: $110 1/31/20
Slide 52: Fannie Mae (FNMA) and Freddie Mac (FMCC)
Fannie Mae (“FNMA”) and Freddie Mac (“FMCC”) Fannie and Freddie are building capital through retained earnings as shareholders await a pivotal Supreme Court ruling Progress during Trump administration fell short of articulated goals Capital rule finalized in November 2020 at 4.0% of assets and gua
Slide 53: FNMA and FMCC Performance Since Inception
FNMA and FMCC Performance Since Inception FNMA and FMCC share prices decreased 23% and 22%, respectively, in 2020 and decreased 21% and 22%, respectively, year-to-date in 20211 FNMA and FMCC share price performance from 10/7/2013 to 2/16/2021: $6 5/5/14: Pershing Square presents investment thesis at
Slide 54: Exited Positions
Exited Positions
Slide 55: BRK.B Share Price Performance Since Inception
BRK.B Share Price Performance Since Inception BRK’s share price decreased 15% since inception through our share sale in May 2020. We made the decision to sell the position to deploy the capital into more opportunistic investments BRK.B share price performance from 5/23/2019 to 5/7/2020: $240 2/15/20
Slide 56: Additional Disclaimers and Notes to Performance Results
Additional Disclaimers and Notes to Performance Results PSH NAV appreciation is calculated with respect to PSH’s Public Shares only. 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 an
Slide 57: Additional Disclaimers and Notes to Performance Results
Additional Disclaimers and Notes to Performance Results Share price performance data takes into account the issuer’s dividends, if any. Share price performance data is provided forillustrative purposes only and is not an indication of actual returns of PSH over the periods presented or future return
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