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Matthias Knab, Opalesque: Bill Ackman's first quarterly shareholder letter as the CEO of a publicly listed asset manager landed on August 12, and the financial press has predictably fixed on the six new stock positions - Netflix, Visa, Mastercard, S&P Global, Intercontinental Exchange and Alcon. Those are worth reading. But for anyone who runs a fund rather than merely allocates to one, the more instructive material sits in the first six pages, where Ackman and CIO Ryan Israel set out, with unusual candor, how they have engineered the economics of the management company itself.
This is a document about business model design as much as stock picking, and it is one of the clearest statements yet of where the alternatives industry is heading.
Ninety-eight percent permanent
The headline structural fact: 98% of the capital Pershing Square manages is now in publicly traded investment vehicles, up from 96% in the first quarter. Fee-Paying AUM stood at approximately $22.3 billion at June 30, up more than 31% sequentially and nearly 11% year-over-year, driven principally by the $5 billion raised in the Pershing Square USA (PSUS) IPO.
The strategic logic is stated plainly. Because the funds are permanent, FPAUM compounds with investment returns as gains are retained and reinvested. There is no continual fundraising operation required to replace redeemed capital. As the letter puts it, this frees the firm to focus on identifying, investing in, monitoring an...................... To view our full article Click here
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