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 2024)
59 slides from Pershing Square Holdings, Ltd. Public Class USD Accum.Shs's investor presentation, Feb 8, 2024
Slide 1: Annual Investor Presentation
Annual Investor Presentation February 8, 2024
Slide 2: Disclaimer
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 performanc
Slide 3: Agenda
Agenda Chairman’s Introduction Strategic Update 2023 PSH Performance Review Business & Organizational Update Equity Portfolio Update Q&A
Slide 4: Chairman's Introduction
Chairman’s Introduction
Slide 5: Board of Directors of PSH
Board of Directors of PSH Board Director Summary Experience ‾ Director, Caledonia Investments plc and BlueRiver Acquisition Corp. Anne Farlow ‾ Former Director, Investec Asset Management Independent Director Chairman of the Board ‾ Former Partner, Providence Equity Partners, Electra Private Equity P
Slide 6: PSH Board Process
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 directo
Slide 7: PSH Board Additional Matters Considered in 2023
PSH Board Additional Matters Considered in 2023 Share buybacks Dividend policy Debt strategy ESG considerations Strategies for addressing discount to NAV U.S. listing 7
Slide 8: Overview of 2023 Performance
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 Annualized Returns Market Indices HFRX Indices PSH S&P FTSE 100 MSCI Equity (1) (1) Period NAV Share Price 500 $USD £
Slide 9: Total Debt to Total Capital Ratio Over Time
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 Total Debt to Total Capital Ratio | 6/30/2015 to 12/31/2023: 10/4/21: Redeemed $369mm of 5.500% 7/25/19: Private 10/1/21
Slide 10: 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 11: Strategies to Address the Discount
Strategies to Address the Discount 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 58th largest company by market capitaliz
Slide 12: Strategic Update
Strategic Update
Slide 13: U.S. Listing Update
U.S. Listing Update 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 c
Slide 14: PSH Fee Offset Arrangement
PSH Fee Offset Arrangement 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 cost
Slide 15: Amendments to Fee Offset Arrangement
Amendments to Fee Offset Arrangement 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 1 Current balance of the Offset Amount ($36 million)
Slide 16: Illustrative Fee Reduction Impact
Illustrative Fee Reduction Impact Through its amended FOA, PSH could realize a meaningful reduction in performance fees as PSCM launches new investment funds Illustrative Fee Reduction Impact from New Management Fee-Only Fund Launched by PSCM:(1) $10 billion 2.0% 20% $40 million Illustrative AUM of
Slide 17: 2023 Performance Review
2023 Performance Review
Slide 18: Strong Performance in 2023 Ahead of Market Indices
Strong Performance in 2023 Ahead of Market Indices 1 2023 Return: PSH NAV Net of Fees vs. Indices Total Return in USD 26.7% 26.3% 24.4% 13.5% 11.5% 6.9% PSH NAV S&P 500 FTSE MSCI HFRX HFRX Equity 100(1) World Activist Hedge Index(2) Index(2) Reflects returns from 12/31/22 through 12/31/23, including
Slide 19: Substantial Five-Year Outperformance
Substantial Five-Year Outperformance 1 5 Year Compound Annual Return: PSH NAV Net of Fees vs. Indices Total Return in USD 31.2% 15.7% 13.4% 12.2% 6.7% 6.1% PSH NAV S&P 500 FTSE MSCI HFRX HFRX Equity 100(1) World Activist Hedge Index(2) Index(2) PSH Annual Outperformance: 1,550 bps 2,450 bps 1,780 bp
Slide 20: PSLP / PSH Annual Net Returns
Pershing Square L.P. (“PSLP”) / PSH Annual Net Returns 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% PSLP 2008 (13.0%) (37.0%) 1.5% Management Fee, 20% Incentive Fee, 2009 40.6% 26.4% Unlevered 2010 29.7% 15.1% 2011 (1.1%) 2.1% 2012 13.3
Slide 21: PSLP / PSH Cumulative Net Returns
PSLP / PSH Cumulative Net Returns Net Returns vs. S&P 500 through December 31, 2023 PSH PSLP / PSH 1,979% 535% 289% 258% 292% 312% 211% 107% 27% 26% 1-Year 5-Year 10-Year Since PSH Inception Since Firm Inception (12/31/2012) (1/1/2004) PSLP / PSH S&P 500 Note: PSLP/PSH data represents returns an inv
Slide 22: Cumulative Net Returns Since Inception
Cumulative Net Returns Since Inception PSLP / PSH Since Firm Inception (1/1/04 – 12/31/23) PSH Annual Investor Presentation 2,200% January 29, 2018 Since PSH Inception PSLP/PSH: 2,000% (12/31/12 – 12/31/23) 1,979% PSH: 292% 1,800% S&P 500: 312% 1,600% 1,400% 1,200% 1,000% 800% S&P 500: 600% 535% 400
Slide 23: Reinforced Commitment to Core Principles
Reinforced Commitment to Core Principles 23
Slide 24: 2023 Contributors
2023 Contributors 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.
Slide 25: 2023 Detractors
2023 Detractors 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
Slide 26: Total Assets Under Management
Total Assets Under Management 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
Slide 27: Business and Organizational Update
Business and Organizational Update
Slide 28: 2023 Key Developments
2023 Key Developments Strong gains across the portfolio enabled PSH NAV to slightly outperform, and PSH share price to substantially outperform, the S&P 500 in 2023 Initiated new investment in Alphabet, the parent company of Google Closely monitored macroeconomic developments and evaluated hedge
Slide 29: Core Hedging Principles
Core Hedging Principles We seek to opportunistically invest in asymmetric hedges to protect our portfolio against macroeconomic risks and capitalize on market volatility Asymmetric payoff structures Limited upfront investment and carrying costs Opportunities to generate large multiples of capi
Slide 30: Differentiated Macroeconomic Research Process
Differentiated Macroeconomic Research Process In addition to conventional top-down macro research, Pershing Square is uniquely well-positioned to leverage perspectives from individual companies Aggregate Government Broad Survey & Sentiment Individual Company Agency Data Measures Results & Commentary
Slide 31: Pershing Square SPARC Holdings Key Highlights
Pershing Square SPARC Holdings (“SPARC”) Key Highlights 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
Slide 32: Case Study: Negotiated Purchase of UMG
Case Study: Negotiated Purchase of UMG 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) Pershing Square Tontine Holdings (“PSTH”) announced agreement to acquire 10% of UMG from Vivendi in June 2021 Followed sev
Slide 33: Organizational Update
Organizational Update Lean, collaborative, and investment-centric organization continues to perform at the highest levels 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 t
Slide 34: PSCM Organization Chart
PSCM Organization Chart Name (PSCM Tenure in Years) 34
Slide 35: 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 32 20 CEO / Portfolio Manager A.B., Harvard College, magna c
Slide 36: Equity Portfolio Update
Equity Portfolio Update
Slide 37: Universal Music Group ("UMG")
Universal Music Group (“UMG”) UMG is a high-quality, capital-light, rapidly growing royalty on greater music consumption Music is in the early stages of higher monetization Recently enacted price increases are beginning to benefit revenues Adoption of “artist-centric” principles will further shi
Slide 38: UMG Share Price Performance Since IPO
UMG Share Price Performance Since IPO 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 from 9/21/2021 to 2/6/2024 (€EUR): 9/21/21: UMG completes € 30 separation from Vivendi and 8/21/23: YouTube and begin
Slide 39: Alphabet ("GOOG")
Alphabet (“GOOG”) We invested in Alphabet in March 2023 when misplaced concerns over the company’s AI positioning reduced its valuation to 15x earnings Dominant player in secularly fast-growing global digital advertising market Digital advertising well-poised to continue taking share from traditio
Slide 40: GOOG Share Price Performance Since Inception
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) GOOG Share Price Performance from 3/2/2023 to 2/6/2024: 7/25/23: Company reports strong Q2 earnings 5/11/23: Company holds its annual I/
Slide 41: Chipotle Mexican Grill ("CMG")
Chipotle Mexican Grill (“CMG”) Chipotle’s continued focus on exceptional food and operational excellence fueled impressive growth in 2023 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, dri
Slide 42: CMG Share Price Performance Since Inception
CMG Share Price Performance Since Inception CMG’s share price increased 65% in 2023 and has increased 9% year-to-date in 2024(1) CMG Share Price Performance From 8/4/2016 to 2/6/2024: 7/18/23: CMG announces first- ever franchise agreement $2,500 with Alshaya Group in the $2,488 Middle East 9/6/16: P
Slide 43: Restaurant Brands International ("QSR")
Restaurant Brands International (“QSR”) QSR is a high-quality business with significant long-term growth potential trading at a discounted valuation Burger King U.S. turnaround well underway and poised for acceleration Burger King’s U.S. comparable sales have improved each quarter, despite majorit
Slide 44: QSR Share Price Performance Since Inception
QSR Share Price Performance Since Inception QSR’s share price including dividend reinvestment increased 25% in 2023 and has decreased 2% year-to-date in 2024(1) QSR Share Price Performance From 6/19/2012 to 2/6/2024: 11/15/21: QSR announces 2/14/23: QSR appoints acquisition of Firehouse Josh Kobza a
Slide 45: Hilton Worldwide ("HLT")
Hilton Worldwide (“HLT”) Hilton is a high-quality business with a long runway of strong earnings growth led by an exceptional management team 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-
Slide 46: HLT Share Price Performance Since Inception
HLT Share Price Performance Since Inception 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 From 10/8/2018 to 2/6/2024: $200 April 2022: Industrywide nightly rates rise 1/11/23: HLT unveils above pre-COV
Slide 47: Howard Hughes Holdings ("HHH")
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 Shortage of resale housing inventory has fueled robust demand for
Slide 48: HHH Share Price Performance Since Inception
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: 6/27/19: Announces its 10/21/19: Board concludes review 12/1/20: Announces David $180 Board of Directors will proce
Slide 49: Canadian Pacific Kansas City ("CPKC")
Canadian Pacific Kansas City (“CPKC”) CPKC is a unique North American railroad with significant earnings growth potential led by an exceptional management team High-quality, inflation-protected business model Operates in an oligopolistic industry with significant barriers to entry Pricing power
Slide 50: CPKC Share Price Performance Since Inception
CPKC Share Price Performance Since Inception CPKC’s share price including dividend reinvestment increased 4% in 2023 and has increased 9% year-to-date in 2024(1) CPKC Share Price Performance From 10/11/2021 to 2/6/2024 ($CAD): 6/28/23: CPKC hosts its $120 11/23/21: Surface Transportation Board inaug
Slide 51: Fannie Mae and Freddie Mac
Fannie Mae (“FNMA”) and Freddie Mac (“FMCC”) Fannie and Freddie remain valuable perpetual options on their potential exit from conservatorship We believe re-privatization is an eventuality, but may take some time Both entities continue to build capital through retained earnings from the current ba
Slide 52: FNMA and FMCC Share Price Performance Since Inception
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: 9/6/19: Fifth Circuit 5/5/14: Pershi
Slide 53: Exited Positions
Exited Positions
Slide 54: Lowe's ("LOW")
Lowe’s (“LOW”) Lowe’s was a highly successful investment for Pershing Square, generating $1.8bn of profits (Net: $1.3bn) for the funds(1) Lowe’s successfully transformed its business Market share gains in Pro and omnichannel Five-year stacked U.S. same-store sales growth increased ~32% since 201
Slide 55: LOW Share Price Performance Since Inception
LOW Share Price Performance Since Inception 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 From 4/6/2018 to 1/5/2024: US Federal Reserve begins raising interest $270 rates, increases in mortgage
Slide 56: Q&A
Q&A
Slide 57: 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. 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 ass
Slide 58: Additional Disclaimers and Notes to Performance Results
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
Slide 59: Additional Disclaimers and Notes to Performance Results
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 Deg
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