U.S. hedge fund manager Bill Ackman, CEO of Pershing Square Capital Management, speaks during the 29th annual Milken Institute Global Conference at the Beverly Hilton in Beverly Hills, California on May 4.PATRICK T. FALLON/AFP/Getty Images
Wall Street analysts started coverage of Bill Ackman’s Pershing Square (PS-N) with mostly neutral-equivalent ratings after the quiet period ended following its recent IPO.
The analysts cited strong long-term returns and scalable model but also noted that much of the upside was already priced in.
Citigroup, UBS Securities, BofA Securities, Jefferies and Wells Fargo were the global coordinators and bookrunners for the IPO.
UBS, which started coverage with a “neutral” rating and a US$39 price target, said the company was a “stock-of-one” with a clear structural edge and its model is simple, scalable, and benefits from operating leverage.
However, UBS added the stock already prices in much of this strength. “At current levels, investors are paying for durability and growth visibility. Further upside likely depends on stronger performance or new capital raises, leaving risk/reward balanced.”
Citigroup said future fundraising (both timing and magnitude) could materially influence fundamental value and sentiment. Citi initiated with a “buy” rating and US$50 price target.
PS shares were up about 50 per cent at around US$36 on Tuesday after debuting at US$24 on April 29.
BofA Global Research, which initiated coverage with “neutral” rating and a US$42 price objective, said PS had been dependent on Ackman for strategy, investing and fundraising and any reduction in his involvement (retirement, political ambitions) could impact investment performance and fundraising.
Shares of Pershing Square USA (PSUS-N), a closed-end fundthat was a part of the combined U.S. initial public offering of the alternative asset management company, were trading at US$40.9, down about 20 per cent from IPO price.
PSUS investors received one Pershing Square share for every five shares they purchased in the fund offering.