Bill Ackman‘s long-anticipated Wall Street debut flopped on Wednesday, as shares of his new closed-end fund tumbled 18% on the New York Stock Exchange despite the hedge-fund billionaire’s rampant following on social media.
Pershing Square USA Ltd. (PSUS) — the flagship vehicle pitched as a way to hand hedge-fund-style returns to mom-and-pop investors — opened at $42 a share, down 16% from its IPO price of $50 — and drifted lower to close at $40.90.
The IPO and an accompanying private placement had raised $5 billion Tuesday night — the largest-ever for a US closed-end fund.
Ackman stated that he wanted to model the fund on Warren Buffett’s Berkshire Hathaway, a permanent-capital machine that can ride out storms and compound for decades.
“This is the first time someone with $50 could be a long-term shareholder,” Ackman told CNBC’s “Squawk on the Street” on Wednesday.
“Usually, the retail gets cut massively back, the institutions are favored. We did the opposite,” he added, promising Berkshire-style annual meetings where everyday investors could grill him directly.
Nevertheless, the market delivered a stinging rebuke.
Investors who snapped up five PSUS shares at the offering price received one free PS share as a sweetener, a novel twist meant to let them ride Ackman’s lucrative 2% flat management fee.
Instead, the giveaway only amplified skepticism about the fund’s ability to avoid the chronic discounts that plague closed-end vehicles.
“I would expect decent demand, but the structure with shares of the managing company as a sweetener suggests that the closed-end fund alone may not be enough to secure the desired level of investor interest,” IPOX Research Associate Lukas Muehlbauer said.
Closed-end funds frequently trade below the value of their holdings, a discount Ackman tried to sidestep by scrapping performance fees and dangling the management-company shares.
It was Ackman’s second stab at an IPO for the fund. He yanked a similar launch in 2024 after demand fizzled.
Ackman rang the NYSE opening bell flanked by his wife, Neri Oxman, and chief investment officer Ryan Israel, drawing roaring cheers from the trading floor.
Yet the applause faded fast once the quotes appeared. The structure was supposed to solve Wall Street’s oldest headache: the flighty capital that forces managers to sell at the worst moments.
Unlike open-end mutual funds, which must redeem shares daily, PSUS locks in the money up front.
Investors who want out must sell to someone else on the exchange to prevent forced liquidations or panic redemptions.
