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While Pershing's London-listed fund ($PSH) has a larger discount, $PSUS is more accessible to US investors with specific mandates and tax considerations, like Texas Teachers, creating a distinct and strong demand base.
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The PS management company is expected to distribute most of its cash flow as dividends. The team's compensation is tied to their large equity stake and performance fees, not high salaries, allowing for a clean income statement.
The 'Vanguard effect' of fee compression hasn't reached private equity because it is an access business, not a commodity. Unlike public stocks, private assets must 'pick you back.' The scarcity of access to top-tier funds allows them to command high fees, a dynamic absent in public markets.
Company investor relations teams want stable, long-term shareholders. Funds known for 5-10 year holding periods become preferred partners for management, providing deeper insights and a research edge unavailable to short-term hedge funds or index funds.
Critics argue Pershing can't grow AUM while its funds trade at discounts. However, the historic $5 billion launch of $PSUS, while its London fund ($PSH) traded at a 30% discount, proves the team can successfully raise new capital regardless.
Despite the structural limitations of a '40 Act fund, Bill Ackman's team is expected to find innovative methods to continue its successful macro hedging strategy, a key component of its historical outperformance.
With truly permanent capital and a lean team of 50, Pershing's management company ($PS) has unparalleled operating leverage. Its AUM can double in three years from performance alone, justifying a 30x+ multiple on fee-related earnings.
Due to its massive scale, franchise quality, and expected corporate access (e.g., quarterly earnings calls), $PSUS will likely trade differently than typical closed-end funds, potentially commanding a premium to NAV.
A skilled investor avoided a winning stock because his Limited Partner (LP) base wouldn't tolerate the potential drawdown. This shows that even with strong conviction, a fund's structure and client base can dictate its investment universe, creating opportunities for those with more patient or permanent capital.
Typical asset manager valuation as a percentage of AUM is misleading for Pershing. Unlike peers whose "permanent capital" is often 6-year funds, Pershing's capital is truly permanent, and its operating leverage is vastly superior, justifying a different valuation framework.
In times of market stress, the best secondary opportunities are in LP-led transactions. Unlike GP-led deals which are often carefully curated, panicked LPs may sell entire fund stakes indiscriminately, "throwing the baby out with the bathwater." This allows discerning buyers to acquire high-quality, diversified portfolios at a significant discount.
