Pershing Square USA Trades at 20% Discount to NAV: Assessing Ackman’s Closed-End Fund Versus the Berkshire Model

Key Points

Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) has long served as a vehicle for investors to ride alongside Warren Buffett. With Buffett retired and Greg Abel now at the helm, the conglomerate’s future trajectory rests on his leadership. Pershing Square USA (NYSE: PSUS) offers a similar proposition—access to Bill Ackman’s investment acumen—but its structure differs fundamentally from Berkshire’s operating model. Here is what to consider when evaluating Pershing Square USA’s discounted valuation.

Buying a Dollar of Assets for Eighty Cents?

Berkshire Hathaway operates as a conglomerate, owning and managing a diverse portfolio of businesses spanning insurance, utilities, railroads, and manufacturing, alongside significant public equity positions. This complex structure allowed investors to effectively co-invest with Buffett. Abel, a long-time lieutenant, is unlikely to deviate sharply from the established philosophy, though he has yet to forge his own long-term track record as chief capital allocator.

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Seeking to replicate the Buffett blueprint, Ackman is building an operating platform through Howard Hughes Holdings (NYSE: HHH). Like Berkshire, Howard Hughes has acquired an insurance operation to harness float for investment. However, this entity remains in the early stages of executing that strategy.

Separately, Ackman launched Pershing Square USA as a closed-end fund—a more direct conduit for his stock-picking. Unlike an operating company, a closed-end fund is a pass-through vehicle holding a portfolio of securities. Its net asset value (NAV) per share represents the portfolio’s value divided by the fixed share count. While mutual funds transact at NAV daily, closed-end funds trade on an exchange where supply and demand dictate price, often decoupling from NAV. Pershing Square USA currently trades at roughly a 20% discount to NAV, meaning investors can acquire $1.00 of Ackman’s selected assets for approximately $0.80.

Contextualizing the Discount

While a 20% discount appears mathematically attractive, closed-end funds frequently trade at discounts for extended periods. Premiums are possible but less common. Investing in Pershing Square USA effectively allocates capital to Ackman’s discretionary strategy. His reputation is formidable, but the discount alone does not constitute a sufficient investment thesis. Structural factors—such as limited liquidity, the fixed capital base, and the absence of a redemption mechanism—can sustain discounts regardless of portfolio performance.

For investors aligned with Ackman’s approach, the current discount may offer a compelling entry point relative to purchasing Howard Hughes Holdings, which carries the execution risk of a nascent operating company. However, it is critical to distinguish the vehicles: Pershing Square USA functions as a traded fund proxy, not a Berkshire-style compounding machine. Those seeking the latter should direct their focus toward Howard Hughes Holdings.

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