|Bid||28.07 x 1200|
|Ask||28.23 x 900|
|Day's Range||27.54 - 29.18|
|52 Week Range||21.50 - 31.21|
|Beta (5Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
InvestorPlace contributor David Moadel believes Bill Ackman’s special purpose acquisition company, or SPAC, is mostly hype, suggesting the time to buy Pershing Square Tontine Holdings (NYSE:PSTH) and PSTH stock has passed investors. Source: Shutterstock On Jan. 13, Moadel argued that PSTH was starting to get frothy. That was at $29. I don’t believe this to be the case and said so several days later.InvestorPlace - Stock Market News, Stock Advice & Trading Tips “There’s an expression in sports that you ride the hot hand. If a goalie’s won a bunch of games in a row, even if he’s not the starter, you let him play his way out of the net,” I wrote on Jan. 19. “I don’t think it’s inappropriate to say that betting on Ackman is very much the same situation. I can guarantee you there are a bunch of smart institutional investors who’ve piled on the Ackman bandwagon.” In the weeks ahead, we’ll see how this friendly disagreement plays out. 7 Great Sub-$20 Stocks to Buy After Inauguration Day For those who agree with my colleague but like the idea of backing a thoroughbred like Ackman, you might want to consider going over-the-counter to buy Pershing Square Holdings (OTCMKTS:PSHZF), Ackman’s London Stock Exchange-listed closed-ended investment company. Here’s why. Pershing Square Holdings and PSTH Stock According to the SPAC’s prospectus, Ackman indirectly, through various affiliates of Pershing Square Holdings, held 50% of its voting power after completing the $4-billion offering in July 2020. In terms of the equity, that worked out to an economic interest of 42.9%. Now, like most SPACs, once the target is found and the combination completed, Ackman’s stake in the merged entity will drop considerably. In Pershing Square Holdings’ August 202o report to shareholders, Ackman had lots to say about PSTH. “On July 22nd, Pershing Square Tontine Holdings, Ltd. (“PSTH”) completed a $4 billion IPO on the New York Stock Exchange. We designed PSTH to be the most investor- and merger-friendly SPAC in the world. Apparently, investors agreed, as we had more than $12 billion of demand for the offering when we stopped marketing the IPO on the second day of the road show,” the report stated. “We capped the IPO at $4 billion, which, when added to the Pershing Square funds’ minimum $1 billion commitment, created the largest blank check company in the world.” Ackman reasoned that by offering to only take a minority position in the ultimate target, the premium it would have to pay for this investment wouldn’t be nearly as onerous as if it were a private equity buyer. I won’t go into further detail. Suffice to say; you should read the report to understand better the pitfalls of SPAC investing. The content is extremely educational. PSTH Valuation In Ackman’s report, he points out that PSTH traded at 106% of its net asset value (NAV) on Aug. 25, 2020. That was based entirely on the SPACs cash held in trust. That’s $21.20 a unit. Six months later, PSTH trades around 145% of its NAV. Given the potential combination, Ackman defended the premium: “PSTH trades at a premium to its cash NAV because the market believes that it is probable that we will find an attractive merger candidate and complete a transaction that creates significant shareholder value,” Ackman stated. “We believe that PSTH’s share price reflects the compound probability of our completing a transaction, the potential increase in the stock price at the time of announcement, and the timing of transaction announcement and closure.” I couldn’t agree more, which is why I’ve argued $29 isn’t too high a price to pay for PSTH stock, even though the target’s identity is still unknown. Six months in, if I owned PSTH, rather than being worried it won’t find a target, I’d be encouraged that it’s six months closer to making an announcement. Early in my career, I worked in sales for a guy who used to say, “Be happy for the no’s because that gets you closer to a yes.” But I digress. The Rationale for Buying Pershing Square Holdings In 2020, Pershing Square delivered a total return after fees of 70.2%. That’s on top of 58% in 2019. That’s some performance despite its investment in Howard Hughes (NYSE:HHC) losing 31% of its value over the past year, easily the fund’s worst performer in 2020. Pershing Square Holdings’ NAV was $46.61 as of Jan. 12, 26% higher than its share price. Put another way, its share price was trading at a 21% discount to its NAV. Historically, that’s typically been the case, although the size of the discount has varied. The downside to buying PSHZF over the counter? You’ll pay management fees of almost 3% a year, fees that won’t go away in down markets. At the same time, you can buy Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) with no fees and plenty of long-term optimism. Something to keep in mind. However, if you want to get on the Ackman bandwagon and don’t want to pay a 145% premium to NAV, Pershing Square Holdings is the only way other than a SPAC ETF that can make this happen. On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared, include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner It doesn’t matter if you have $500 in savings or $5 million. Do this now. The post Play Bill Ackmanâs SPAC Without the Inherent Frothiness appeared first on InvestorPlace.
Pershing Square Tontine Holdings (NYSE:PSTH) is considered one of the hottest special purpose acquisition companies (SPACs) for 2021. The company that is sponsoring the SPAC is run by the hedge fund manager Bill Ackman. What makes this SPAC particularly interesting for some investors is that shares of PSTH stock started at a premium $20 share price. Source: Pasuwan/ShutterStock.com The stock is already up more than 25%. Given that the SPAC is linked to Ackman (more on that below), the spike in the SPAC’s share price is not surprising. And this comes even though Pershing Square Tontine Holdings does not yet have a target for its affection (and billions of dollars). A SPAC is not necessarily more risky than other investment types. But the structure of the SPAC means investors will hold their shares at least until the target of the SPAC is identified. In the case of Pershing Square, Ackman has about 18 months left to find his “mature unicorn.”InvestorPlace - Stock Market News, Stock Advice & Trading Tips What’s In a Name? Make no mistake about what a SPAC is all about. As David Moadel accurately states, it’s a bet on the jockey, not the horse. And Bill Ackman is a jockey that stands head and shoulders above others. Ackman is a well-known activist investor. I remember that his hedge fund’s short sell play in Herbalife Nutrition (NYSE:HLF) didn’t end well. But Ackman’s also had many successes. 10 of 2020’s Most Fascinating SPAC Stocks And if you’re unfamiliar with Ackman then you should know that his hedge fund, Pershing Square Capital Management, reported its second-consecutive year of record performance in 2020. The fund had an overall return of 70.2%. That beat an already impressive 58% return the fund delivered in 2019. So it’s only natural that there would be intense speculation regarding who the object of Ackman’s eye will be. But it seems that whoever it will be will not be his first choice? Fear of Commitment? I don’t know the rules of this mating dance very well. But I am somewhat amused by the fact that it seems that every time Ackman is linked to a target, the target in question issues a quick denial of the rumor. Will Ashworth wrote that both the payment platform Stripe and Airbnb (NASDAQ:ABNB) rebuffed Ackman. And Moadel also mentioned that Bloomberg was also on the list of companies that have said no. Maybe it’s just considered bad form to look too eager to enter into a relationship like this. It could very well be that these companies, like Airbnb, want to control their own destiny. However, my daughter enjoys The Bachelor and tells me that the “contestants” that are offered a rose generally accept. Nevertheless, Ackman’s affections should not go unrequited for too much longer. And when a suitable partner is found, PSTH stock will probably rise even further. The question is whether investors should jump on the stock right now. What to Do With PSTH Stock? I don’t have to remind you that investing in a SPAC is a speculative investment even when investors know the apple of the SPAC’s eye. However, for a blind SPAC the risk is even greater. However investors shouldn’t be too worried. As David Moadel says, investors in PSTH stock are betting on Ackman. And a writer for Seeking Alpha reminds investors that Ackman will find a partner. The question of if whether the marriage will be successful is one for another day. In that same Seeking Alpha article, the writer suggests that investors can make an investment in Pershing Square Holdings (OTCPK:PSHZF). This is a closed-end fund that allows investors to take a position in Ackman’s hedge fund and, by extension, Pershing Square Tontine Holdings. While this is not a pure play in the SPAC, it would protect investors from paying the current premium on PSTH stock. On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets The post Pershing Square SPACâs Unrequited Love Will Be Rewarded appeared first on InvestorPlace.
Investors have high hopes for Pershing Square Tontine Holdings (NYSE:PSTH) stock. SPAC stocks were one of the hottest investing trends in 2020. But, while, at some point, the enthusiasm will fade, 2021 could be another banner year for blank-check companies. Source: Shutterstock Especially for those with more established backers. That’s the case here, as Pershing Square Tontine counts billionaire investor Bill Ackman as its key principal. While mostly known as a activist hedge fund manager, Ackman was involved in SPACs before they were cool. A decade ago, he launched Justice Holdings. Its eventual merger partner? Burger King. The renamed Burger King Worldwide eventually folded into fast food conglomerate Restaurant Brands International (NYSE:QSR). Along with this prior Ackman-originated SPAC, the investor dabbled in other SPACs as well, as seen from his mid-2010s investment in Nomad Foods.InvestorPlace - Stock Market News, Stock Advice & Trading Tips But now, with Pershing Square Tontine, investors are expecting something big. Via the capital it raised, and a commitment from Ackman, it has up to $7 billion at its disposal. Excitement remains high. Yet, that doesn’t guarantee additional gains are on the table. How so? With high-expectations already priced-in, there’s more that could possibly send shares lower, in the coming year. 10 of 2020’s Most Fascinating SPAC Stocks Given its still mostly speculation driving SPAC names like this one, tread carefully. Rallying nearly 34% above its offering price of $20 per share, investors may be setting themselves for disappointment. If the blank-check company fails to wow investors with its merger partner choice, shares could fall back to where they started just a few months back. Potential Merger Partners for PSTH Stock What privately-held company is Pershing Square Tontine going to buy? The rumor mill on Wall Street, and in the financial media, hasn’t had trouble coming up with a list of candidates. Back when it went public, Reuters reported the company was “in talks” with AirBNB (NASDAQ:ABNB). But, that “unicorn” decided to go the traditional IPO route instead. After that, financial media giant Bloomberg LP became the most high-profile merger candidate for PSTH stock. As InvestorPlace’s David Moadel mentioned on Dec 16, SpaceX and Stripe have been potential targets as well. Yet, these aren’t the SPAC’s only options. What we know for certain is that Ackman is eyeing “mature unicorns.” That is to say, privately held startups worth at least $1 billion. Taking a look at an exhaustive list of unicorn companies, there are quite a few possible merger candidates. While its casting a wide net for potential target, keep one thing in mind. Unlike other SPACs, Pershing Square Tontine isn’t going for a “growth at any price” play. In other words, don’t expect it to buy a high-flying EV or SaaS upstart. With this in mind, the chances of an epic rally post-deal seem minimal. But, that’s not all! Given shares have already taken off, on SPAC speculation alone, PSTH stock could tumble back to $20 per share, as investors are underwhelmed by its eventual choice of merger partner. Why This SPAC May Fail to Pop After Announcement Despite scuttlebutt of deal talks with a variety of potential targets, Ackman’s still shopping around. But, the clock’s ticking. Per the prospectus, Pershing Square Tontine has 24 months from its offering date to complete an initial business combination. A set due date for a deal is par for the course with SPACs. As this Seeking Alpha contributor put it back in August, there’s a near-certainty he finds a merger partner. Yet, that doesn’t mean PSTH stock is set for another surge higher once it announces a deal. Why? Investors today have priced this much like the blank-check companies taken public by SPAC impresario Chamath Palihapitiya. Palihapitiya has built a strong track record with both his SPACs, Virgin Galactic (NYSE:SPCE) and Opendoor (NASDAQ:OPEN). Yet, Ackman’s “mature unicorn” criteria, detailed further here, indicates his short list of targets differs from the ones the Palihapitiya sets his sights on. This may limit the potential for shares to rip higher after the deal’s announced. Putting it simply, there’s more on the table to push shares lower than higher from here. Between the priced-in enthusiasm, and the potential for disappointment, there’s reason to chase this at today’s prices. Too Late to Chase Pershing Square Tontine Stock With its established backer, investors priced big expectations into this high-profile SPAC stock. But, with Ackman’s “mature unicorn” criteria, odds are this blank-check company won’t be acquiring the kinds of high-flyers rival SPACs have bought in the past year. The problem? Investors are pricing it as such. Given the high chances it disappoints SPAC investors, watch out with PSTH stock, as it could fall back towards its $20 per share offering price. On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article. Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets The post Pershing Square Tontine Stock Could Be Setting SPAC Investors Up for Disappointment appeared first on InvestorPlace.