From: allin
Bill Ackman’s attempt to launch an Initial Public Offering (IPO) for his fund, Pershing Square, was recently postponed [01:17:19]. This event highlights the unique challenges faced by hedge funds when trying to transition to a public market structure, contrasting with the success of some larger asset management firms.
The Attempted Pershing Square IPO
Bill Ackman’s plan involved initially raising 2 billion [01:06:26]. However, the order book for this offering came in at less than $1 billion, leading to the complete scrapping of the IPO plans [01:06:34]. The ultimate goal behind launching this fund was to bolster the underlying logic for potentially taking the entire Pershing Square management entity public [01:10:28].
Initial Ambition
Bill Ackman sought to build an enterprise, Pershing Square, as a standalone business with enterprise value measured by the assets under management, with an aspiration to grow from roughly 50 billion [01:09:12].
Challenges of Publicly Listing Hedge Funds
The postponement of Ackman’s IPO underscores the inherent difficulty in translating the value of a hedge fund into publicly tradable equity [01:11:02]. Hedge funds, by their nature, are in the business of “making bets,” which are often short-term, anomalous events with unpredictable outcomes [01:10:43]. Investors, who seek to underwrite 20 or 30 years of returns, find it challenging to predict this consistency over such a long period for a hedge fund [01:10:54].
"Holy Grail" of Finance
The “Holy Grail” for those who run hedge fund businesses is to convert their profit share and management fees into recognized equity value, similar to how startups are valued based on future projections rather than current revenues [01:07:29].
While companies like Blackstone, KKR, and Apollo have successfully gone public, they have demonstrated the ability to raise enormous amounts of capital, approaching a trillion dollars, and generate consistent revenue from management fees (e.g., 2% per year) [01:08:19]. Their funds deliver “very consistent returns, not great, but they never lose money” [01:14:27], which allows them to be viewed as stable companies rather than just hedge funds [01:14:31].
Some reports suggested market conditions or Ackman’s public activity on social media platform X (formerly Twitter) as reasons for investor pullout [01:12:47]. However, the market, while not at its best, is also not at its worst, making it difficult to solely blame macro conditions [01:13:38].
Bill Ackman’s Resilience and Public Presence
Despite the IPO’s failure, Bill Ackman is lauded for his exceptional resilience and capability as a business person [01:11:50]. He has faced public challenges before but consistently “keeps coming back” [01:12:05].
His active and opinionated presence on X/Twitter is seen as a significant asset [01:16:16]. This direct communication allows him to speak directly to his audience, bypassing traditional media that might “define you and create ambiguity” [01:16:38]. While some disagree with his comments on topics like “wokeism” and DEI, his performance as a money maker is seen as undeniable and measurable, making his social media opinions largely irrelevant to his financial acumen [01:15:41]. The rise of the authentic politician and CEO is a prevailing trend, where authenticity is valued more than traditional image management [00:30:07].
The outcome of Ackman’s IPO attempt reinforces the idea that finance entities seeking to sell a piece of their “General Partner” as a company face an uphill battle, indicating that there is generally not a lot of equity value in these types of businesses [01:12:23]. This reflects broader market resets and a shift towards valuing measurable, long-term enterprise value over short-term financial bets.