Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

PSTH: Want To Bet On Bill Ackman?

By InvestorPlace. Originally published at ValueWalk.

PSTH Ackman Hedging Pandemic Paris Hilton SPAC structure Pershing Square Tontine Holdings pershing square SPAC podcast greatest trade Bill Ackman Coronavirus valeant VRX herbalife HLF activism shortselling MLMs VALUEWALK Pershing Square Capital investors activist investing William Ackman

Better to do what Ackman is claiming to do rather than hire him to do it through shares of PSTH stock


Q4 2020 hedge fund letters, conferences and more

Buying a SPAC before it has a target is gambling on the SPAC’s sponsor.

Buying Pershing Square Tontine Holdings (NYSE:PSTH) stock means betting on Bill Ackman.

A special purpose acquisition company (SPAC) without a target is like a suit you’re picking up at the dry cleaners. It may smell nice, but it’s empty. You’re gambling the sponsor buys something that can jump quickly in value.

There are plenty of rumors about what PSTH might buy. These range from the Subway sandwich franchise to the Coinbase cryptocurrency market to Pornhub. But until a name is identified the only one that matters is that of Bill Ackman.

What Ackman Wants

According to the PSTH S-1 document, Pershing Square Tontine is seeking an investment with predictable, growing cash flows, in an area with high barriers to entry, an attractive valuation and exceptional management. This just in: I want a pony.

The document, in short, tells us nothing about what Pershing Square might buy. It makes more sense, then, to look at what Ackman has bought in the past.

That record is spotty.

He has had some winners, like getting Wendy’s (NASDAQ:WEN) to spin off Tim Horton’s, which was later gobbled up by Brazil’s 3G Capital through Restaurant Brands (NYSE:QSR). He also bought Valeant (some of which is now Bausch Health (NYSE:BHC)) while it was rising. He bought the now-bankrupt J.C. Penney (OTCMKTS:CPPRQ) at $22. Total returns between 2012-2017 trailed those of the S&P 500.

Ackman’s best-known position was a short, in Herbalife Nutrition (NYSE:HLF), where he found other big hedge funds on the other side of the trade  and nearly lost everything. (Gamestop (NYSE:GME) pajama traders should take note.) His financial credibility today comes from a bet he made against the markets a year ago, a hedge against the pandemic market crash. He made $2.6 billion, and PSTH is the result.

The Ackman Call

Despite owning nothing, PSTH stock has been popular since its mid-September debut at $20/share. It’s up 45%. It’s the market’s Seinfeld.

Why? Our Will Ashworth calls Ackman’s bet against the markets “the trade of the century.” He notes that the last two years have seen a return on assets of 58%, then 82%. He’s not worried that the SPAC has gone for months without a deal, saying the average SPAC transaction takes nearly a year to finalize.

But a jump like that before any deal looks frothy to our David Moadel. He says successful SPACs like Switchback Energy (NYSE:SBE) don’t move until a target is identified, in this case Chargepoint.

Mark Hake is right. Until a target is identified, PSTH is just a massive gamble. On the other hand, gamblers have been beating investors handily in the current market. Real companies must deliver growth and earnings. Gambles don’t have to. Lancadia Holdings II doubled in price while waiting to become Golden Nugget (NASDAQ:GNOG), which has done nothing for investors since the start of the year.

The Bottom Line on PSTH Stock

I’m not a fan of Bill Ackman. I was dumping on him back in 2013, long before it was cool.

And, I haven’t seen anything from him since to change my view. I considered Valeant, one of his biggest bets, to be a scam. He played a big role in driving J.C. Penney down. Remember Ron Johnson?

Even Ackman’s big win was that of a shark, not an entrepreneur. He bet on a crash and turned out to be right. Is that a man who knows how to grow a company? I don’t think so.

I’d rather do what Bill Ackman is claiming to do than hire him to do it. PSTH is seeking growing cash flows, high barriers to entry, attractive valuations and exceptional management. Such companies are out there, but there are no shortcuts to finding them.

At the time of publication, Dana Blankenhorn owned no shares (directly or indirectly) in any companies mentioned in this article.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack https://danafblankenhorn.substack.com/.

Article By Dana Blankenhorn, InvestorPlace

The post PSTH: Want To Bet On Bill Ackman? appeared first on ValueWalk.

Sign up for ValueWalk’s free newsletter here.


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!