Investor Ackman’s Pershing Square launches new fund aimed at US retail investors

By Svea Herbst-Bayliss

NEW YORK (Reuters) -Billionaire investor William Ackman is offering a new hedge fund to U.S.-based retail investors, allowing Main Street to tap into his double digit performance gains previously reserved for Wall Street clients.

Ackman’s Pershing Square Capital Management said in a regulatory filing on Wednesday that the firm is launching Pershing Square USA, an investment vehicle that will be listed on the New York Stock Exchange.

There will be no minimum investment, the fund will charge a flat 2% fee every year after the first year and it will be available to retail investors who lack the net worth needed to invest in hedge funds.

The news could generate fresh buzz for the 57-year old fund manager who recently ventured beyond telling companies how to run their businesses to focusing on antisemitism on college campuses. He also pushed for the ouster of three university presidents over their handling of free speech in the wake of the Oct. 7 Hamas attack on Israel.

The new fund will be structured as a closed-end fund that raises money through an initial public offering and then its shares will trade on the exchange. It will be managed by Ackman, Ryan Israel, the firm’s chief investment officer, and other members of the investment team.

Previously Ackman’s funds were available only to high-net worth individuals, institutions and foreign investors who could put money into London-listed Pershing Square Holdings.

The filing does not say how much money the fund hopes to raise. Pershing Square Capital Management currently oversees roughly $18 billion in assets.

Ackman can launch the new fund since he structured the fees in a way to avoid U.S. regulators’ rules against charging retail investors the kind of incentive fees that hedge fund investors pay when the fund performs well.

Recent rule changes also now allow funds to use derivatives more. These are tools that have netted Ackman’s investors big gains over the past years through bets on credit markets during COVID and on interest rates last year.

As Ackman’s returns surged over the last years, interest in him and his funds has grown. The investor returned an average 31% gain a year over the last five years.

But his investment career has been studded with some notable losers as well, including a bet that Herbalife (NYSE:)’s stock price would fall and that Valeant’s stock price would keep climbing.