Jefferies on Sunday initiated coverage on Pershing Square USA (PSUS) with a Buy rating, pointing to the fund’s strong performance track record and what the firm sees as an attractive entry point.
Pershing Square USA, Ltd., PSUS
PSUS currently trades at $41.30, near its 52-week low of $40.33. That leaves the stock down roughly 17% from its IPO price. The fund has a market cap of $4.13 billion.
Analyst Matthew Hose said the fund’s discount to net asset value is a key reason for the Buy call. Jefferies also highlighted the absence of a performance fee as a structural advantage that should help net returns over time.
PSUS is a U.S.-listed closed-end fund that holds large minority positions in 12 to 15 companies. The fund targets businesses that are simple, predictable, and free-cash-flow generative. It also looks for companies it believes are undervalued with clear catalysts to unlock that value.
The fund may use asymmetric hedges to protect against specific macroeconomic risks and to benefit from market volatility — a strategy closely associated with Bill Ackman’s broader investment approach.
Jefferies said the fund is expected to mirror other Pershing Square core funds, which have outperformed the S&P 500 over the long term. The firm sees net asset value improving as the portfolio becomes fully invested and as liquidity grows.
The bank also cited the fund’s strong marketability, driven by both the Pershing Square brand and the quality of its portfolio holdings.
PSUS maintains a “Good” financial health score according to InvestingPro data. The fund does not currently pay a dividend.
Seeking Alpha analysts, by contrast, rate PSUS as a Hold — a more cautious view than Jefferies.
In a separate note, Jefferies analyst Daniel Fannon initiated Pershing Square Inc. (PS) — the alternative asset management company — with a Hold and a $40 price target.
Fannon noted that PS has a capital structure that differs from most traditional and alternative asset managers. Around 96% of its fee-paying capital is classified as permanent, which gives it a more stable revenue base.
Jefferies described PS as fairly valued and said the risk/reward is balanced. The firm pointed to PS trading at fee-related earnings and debt-to-equity premiums compared to its peers.
PS has performed very differently from PSUS since listing. The management company has risen roughly 47% from its IPO price.
Seeking Alpha authors rate PS as a Buy, while Wall Street analysts — including Jefferies — sit at Hold.
PSUS’s IPO originally came in at the lower end of its fundraising target, raising around $5 billion. That included a $2.8 billion private placement. The offering saw strong institutional backing but a cooler reception from retail investors.
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