Ackman’s Pershing Square Seeks Up to $10 Billion in NYSE IPO

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2:31Scarlet Fu:I mean, one thing that we'll know that we can look at to return to normal is deal making, is fundraising. That'll be a sign that people feel comfortable, companies feel comfortable with the current market environment. And it looks like at least one person feels good about how things are shaping up. Bill Ackman has filed to take public his hedge fund firm, Pershing Square, and a new closed-end fund at the same time. Bailey Lipschultz is Bloomberg News' senior equities reporter. He's been covering IPOs for years, and this is something we had been anticipating, Bailey, because there was this effort to list the hedge fund, Pershing Square, back in 2024 that didn't get very far.

3:10John Tucker:Well, so back in 24, the initial thought process from our understanding from Pershing Square was we're going to raise a lot of money in a closed end fund. So that way we can have an even higher fee base. We want to raise more than 20 billion dollars. Then that number became like 10. Then it became five. Then it didn't actually get off the ground. So that was for the closed end fund. Now we're seeing them come back with this, I'll call it novel pitch, that if you invest in the closed-end fund, we'll give you some shares to the actual management company as a way to entice people to buy. Their pitch was, you know, we had a few billion dollars in demand last time.

3:45John Tucker:We now have$2.8 billion in private demand. As long as we can bridge the gap to more than$5 billion in this closed-end fund, ups our fees and also gives us something else to give investors. And it ultimately takes the company public.

3:57Bailey Lipschultz:So it's fee? What's the motivator here? Is it fees? It's creating a vehicle. He's pausing.

4:06John Tucker:Well, it goes back to kind of the pitch that.

4:09Bailey Lipschultz:I'm just trying to assess whether or not this is a sign of healthy markets and it's a good move.

4:18John Tucker:It's something that they need to do. So point blank, Pershing Square failed to raise a handful of billions of dollars in a closed end fund two years ago.

4:29Bailey Lipschultz:He's not coming at this from a position of strength, or is he? I know I'm really pressing. I mean, maybe.

4:38John Tucker:OK, things that we know. They wanted to raise tens of billions of dollars before. They did not. They had discussed potentially taking the management company public. Now, with this process, both can happen potentially. Raising$5 to$10 billion increases the amount of fees that the company can generate, the management company, and it takes the management company public.

4:59Scarlet Fu:A lot of people know Bill Ackman as an activist investor. They think of Herbalife. They think of all these other companies that he kind of targeted, made his case against, or made his case for. He no longer really does that, does he?

5:11John Tucker:No, it's pretty much holding a handful of companies. So whether it's Chipotle or Alphabet, Brookfield, like kind of buying a concentrated portfolio and holding it.

5:19Scarlet Fu:He's also now even like Warren Buffett kind of using that playbook.

5:22John Tucker:That's exactly what he's trying to lean into, though, a bit more vocal on social media with his views, which depending who you talk to is bullish or bearish. But really trying to cater with this offering to retail investors. Point blank is kind of the view of this pitch.

5:39Bailey Lipschultz:So now he's going to listen to retail investors and, you know, run his company.

5:44John Tucker:He engages with them, though. He does engage. He shares a lot of things on social media.

5:49Bailey Lipschultz:I'm just still trying to wrap my head on why he'd want to go public with anything and then be open to so much more scrutiny and regulation or whatever.

5:57John Tucker:Well, I think that's kind of the discussion going back to 2024 when they sold a stake in the company, Pursing Proper. that was viewed as a way to start the process to going public. So there was always a vision to IPO-ing or taking public the management company in some capacity. And it does benefit by, if you're a management company and you're collecting a 2 % management fee, the more assets you have under management, the more fees you have, the more attractive the company does then. So what's the timeline now? So base case at a bare minimum, you need 15 days from this filing before you can launch an IPO process.

6:33John Tucker:It takes about a week or so. So when you look at the calendar, two and a half weeks from now, you get closer to some of the holidays. So maybe this is something that we see starts to hit the road after the Easter holiday when people are back in their seats. But at a minimum, this process cannot formally start for at least 15 days and then we'll move from there. But we're expecting it probably just looking at the calendar, call it right on the other side of April.

6:57Scarlet Fu:OK, again, I mean, some sign of confidence from Bill Ackman that he's moving forward with this in a period where there's a lot of uncertainty about asset prices, about the global economy.

7:05John Tucker:And that's something that they kind of call out in his eight page letter, basically saying that, you know, most of the time companies who are looking at IPOing will not go when there's volatility in the market. Their pitch is, well, if you're giving us money to turn around and invest, well, we should be buying low and then ultimately profiting from there.

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7:59Scarlet Fu:Here today, Rome tomorrow. Join now at Sonesta.com. Terms and conditions apply. The thing about AI for business, it may not automatically fit the way your business works.

8:10Bailey Lipschultz:At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM.

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9:21Bailey Lipschultz:The Kohl's, they had results. In fact, they reported worse than expected sales for the last quarter. They continue to struggle to revive years of declining sales. Let's figure out the Kohl's story this morning. Mary Ross Gilbert, Senior Equity Analyst with BI, covering retail. We actually, Mary, just did an informal survey in the studio. Charlie Pellett, the last time he was in a Kohl's was 10 years ago. Scarlett.

9:47Scarlet Fu:About 10, 12 years ago.

9:48Bailey Lipschultz:Yeah, okay. Me, actually, I do go there, but probably about six months ago. Who is Kohl's customer? I mean, clearly not us.

9:59Mary Ross Gilbert:So, John, the Kohl's customer is largely a low-to-middle-income consumer. And I just went there yesterday just to see what the store looked like. And I did observe that their customers are definitely seeking value. You don't always see a lot of bags because they're in there carefully choosing, trying to find value. And so this is why the company has brought on deal bars. Those are$10 and under items. And now they've announced that they're also bringing in toy bars. So they want to also feature items, again,$10 and under with different price points of like$4.99,$5.99, et cetera. So they're really trying to gain traffic and conversion, but really they're also leaning into their private brands.

10:48Mary Ross Gilbert:So, for example, I did observe that Elsie Lauren Conrad, which is their women's label, it's a really fun label. And they did a great presentation in the store yesterday. The problem is that the rest of the store is still not really cohesive. So we're really not there in terms of where we need to be, where you can see a real cohesive strategy. And we saw a lot of clearance in the stores as well. So they still have a road ahead, as you highlighted, with the four years of stacked comparable sales declines.

11:24Scarlet Fu:Yeah, that's quite a track record to have to turn around. Mary, according to a company presentation at the earnings, Kohl's admitted that it lost competitive ground during high traffic shopping windows, including Black Friday, Cyber Monday and the week following Christmas. When I read that, I thought that that was a fairly startling admission. How do you interpret that?

11:44Mary Ross Gilbert:I wasn't surprised, candidly, because we were there on Black Friday and I could see that shoppers were trying to spend because you get sort of a free the minute you walk in the door, you get a free Kohl's cash and you scratch it to figure out how much cash you get. And trying to find a way to spend it was a challenge because there were a number of excluded items. And while they've increased the number of brands that are not excluded, there's still a fair amount. So there was some confusion and not a lot of customers were walking out with bags is what we observed. So we felt like, you know, it was hard pressed, let's say, to find a way to spend the money.

12:23Mary Ross Gilbert:So they really needed to do a better job. And that's what they admitted on finding values. And that's why they say that their margins this year, you know, are going to be hard pressed because they need to get the sales lift, right? They've done such a great job on managing expenses and they'll continue to do so. But until they get the sales moving in the right direction, they're not really going to see that margin improve because they do have to be more promotional, have sharper values, and so that's going to impact margin to a certain extent. But it's important so that they can be competitive because we saw strong results in off price, as you know.