Bill Ackman's Pershing Square IPO is right around the corner

We've seen this movie before.

Bill Ackman is trying again to bring Pershing Square to U.S. investors. This time the pitch is a bit sweeter.

The structure is a bit unusual: Ackman plans to launch Pershing Square USA, a closed-end fund, and at the same time distribute shares of Pershing Square Inc., the management company.

For every 100 shares of the fund, investors receive 20 shares of the management company—roughly a 10% bonus based on current estimates.

The fund could raise $5B–$10B, and Ackman already has $2.8B committed from early investors.

But there are some important caveats....

Pershing Square USA is a closed-end fund. That means it issues a fixed amount of shares, which then trade like stocks or exchange-traded funds. Investors cannot redeem their shares from Pershing Square. Their only liquidity is in the open market.

First, closed-end funds almost always trade at discounts to NAV often 5–10% or more. Ackman’s existing European vehicle already trades at about a 23% discount, which should make investors pause.

Second, the fund charges a 2% annual management fee, which is expensive in a world where investors can buy low-cost index funds or even replicate much of Ackman’s portfolio themselves. Buffett would never do this by the way.

Third, the $10B implied valuation for the management company may already bake in a lot of optimism.

Ackman’s track record over the past seven years has been strong, and he’s an exceptional capital allocator. But structurally, this deal looks like a classic example of Wall Street financial engineering: bundle a fund with the management company, add a “bonus” equity sweetener, and hope investors overlook the underlying economics.

The question isn’t whether Ackman is talented.

It’s whether the structure leaves enough upside for public investors after the fees, discounts, and valuation.

My instinct: HELL NO! He's trying to don himself the next Buffett, but Buffett would never put this deal in front of us.