Bill Ackman Seeks to Make Pershing Square Capital a "Modern Version" of Berkshire Hathaway

How does the dual listing structure help Pershing Square secure permanent capital?

Bill Ackman never hides his ambitions. His application to list Pershing Square Capital Management may be the first step toward achieving his ultimate goal: following in the footsteps of one of the world’s most successful investors, Warren Buffett, to create his own “modern” Berkshire Hathaway.

Pershing Square Capital Management filed for listing on the New York Stock Exchange on Tuesday. This is Ackman’s second attempt to take the company public. Previously, he planned to raise $25 billion for the largest closed-end fund IPO in history, but that ambitious plan failed in 2024.

This time, Ackman has scaled back the target size, aiming to raise between $5 billion and $10 billion. He also adjusted the listing structure, planning to list the closed-end fund and Pershing Square’s parent company simultaneously, with ticker symbols PSUS and PS, respectively. To attract investors, every purchase of 100 shares of the closed-end fund will automatically come with 20 shares of Pershing Square Capital Management. According to The Wall Street Journal, the minimum subscription for this deal is relatively affordable at just $5,000.

Through this approach, Ackman hopes to replicate Buffett’s success with Berkshire Hathaway and obtain so-called “permanent capital.” These funds may come from his followers on the X platform—investors attracted by his often fiery and sometimes controversial remarks. Ackman has about 2 million followers on that platform. While Pershing Square already has a similar dual listing structure in Europe, listing in the U.S. will make it easier for him to access wealthy American investors.

For Ackman personally, this is a way to follow his (informal) mentor’s footsteps.

In 2023, Ackman stated: “To some extent, I have always been a Warren Buffett believer, though not officially. Over the years, he has been my informal mentor.”

Ackman’s Imitation of Buffett’s Investment Model

Traditional hedge funds like Pershing Square allow investors to redeem their funds quarterly or annually. Therefore, fund managers need to keep some cash on hand, and if investors withdraw, they may have to sell assets.

With this dual listing structure, Pershing Square will be able to access capital from its closed-end funds, which cannot be redeemed directly; if investors want to exit, they can only sell their shares on the open market.

This arrangement essentially mirrors Buffett’s investment approach. Buffett’s so-called “permanent capital” at Berkshire Hathaway has no maturity date, is not subject to forced redemption, and investors do not expect to get their money back. This can be understood as the “Buffett model”: raise capital once, hold it permanently, and let the compound interest mechanism operate on its own.

Although Buffett was not the founder of Berkshire Hathaway—he acquired the struggling textile company in the 1960s—this legendary investor used this “permanent capital” approach to transform the company into a global financial giant, now valued at $1 trillion, with businesses including Geico Insurance, Dairy Queen, and BNSF Railway.

At a CNBC conference in 2023, Ackman said of Buffett’s strategy: “Having this kind of permanent capital allows him to take a long-term investment perspective. In the asset management industry, because capital can be withdrawn at any time, people are often forced to make short-term decisions.”

The Wall Street Journal reported that Ackman wrote in a letter to investors attached to the listing application that Pershing Square’s IPO would give it an advantage when competing with hedge funds focused on short-term investments.

Ackman stated in the application: “For Pershing Square, competing with investment managers that have short-term capital is an important and sustainable long-term competitive advantage, especially in an environment where more and more capital is managed with short-term investment goals.”

Ackman previously attempted to realize his dream of creating a “Berkshire clone” by betting on real estate developer Howard Hughes Holdings. Last year, he announced this deal on X, calling it a “modern Berkshire.”

However, whether this investment will succeed remains uncertain. Bloomberg reported that after Howard Hughes’ board rejected his initial offer, Pershing Square purchased $900 million of newly issued shares in May last year to gain control, and Ackman was appointed CEO. But in February this year, a group of Howard Hughes shareholders sued Ackman, claiming the deal was “unfair.”

Ackman’s “Informal Mentor”

Ackman has had big ambitions since childhood. He graduated with honors from Harvard University in 1988 and later earned an MBA from Harvard Business School. Shortly after graduation, he co-founded his own hedge fund with another Harvard alumnus, managing only $3 million at first. The fund achieved some success but collapsed in the early 2000s.

However, Ackman rebounded from that failure and founded Pershing Square. The firm started with just $54 million in seed capital and has grown into an asset management firm with $28 billion under management.

Throughout this journey, Ackman has often said that much of his inspiration comes from Buffett. In a 2023 CNBC interview, Ackman discussed the similarities in their careers. He pointed out that before transforming a struggling textile company into Berkshire Hathaway, Buffett was essentially a radical investor like himself, “running a series of private partnerships.”

In fact, last year, Ackman posted on X that reading Buffett’s famous annual letter to shareholders was what inspired him to become an investor.

Ackman wrote that when he founded his first hedge fund at age 26, “I thought, maybe someday I could own a diversified holding company like Berkshire that achieves extraordinary long-term performance.” (Fortune China)

Translator: Liu Jinlong

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