저자: 미상 · 외국인
요약 보기
Pershing Square Holdings(PSH)의 2004~2021년 성과를 분석. 2020년 NAV 70.2%는 2월~3월 신용부도스왑(CDS) 헤지 수익이 주도했고, 이후 금리스왑션 포지션으로 추가 수익. 그럼에도 PSH는 25~33%의 지속적 할인 거래. 회사 측은 자사주 매입 21%, 내부자 지분 25% 이상 확대로 대응. 자사 주장은 'corporate inequality'로 강한 기업이 위기 후 점유율을 확대한다는 것이며, PSTH 스팩 구조와 Footsie 100 편입 시도도 소개. 복제 포트폴리오로는 2020년 수익의 대부분을 재현할 수 없다고 주장.
다듬은 글
Welcome back to the deep dive. Today we are wrestling with well one of the great paradoxes in modern finance. We're looking at an investment firm that achieved just astronomical returns in 2020 and 2021. I mean performance that should make any investor just green with envy. Absolutely. and yet their own publicly traded shares consistently struggled stuck with this massive persistent undervaluation.
It is an insane contradiction and the material we've synthesized for you gives this incredibly detailed look at how it all happened specifically focusing on Persing Square Holdings or PSH, right? We're tracking their entire journey from what 2004 right through early 2021 covering some of the most dramatic market shifts we've well ever seen.
So our mission today is to really unpack this. We've got three, I think, crucial and surprising elements. First, we have to expose the secret weapon, the financial mechanism that drove that huge 2020 success, right? The how exactly. Second, we need to drill down into that stubborn market anomaly. Why on earth did PSH trade at such a heavy discount?
And third, we need to get into the radical new model they engineered with the world's largest spack, PST. Okay, let's start with the big picture because the 2020 explosion, it wasn't some sudden miracle. It was really built on a foundation of long-term disciplined compounding. And the long-term numbers are well, they're truly impressive.
Looking at the cumulative net asset value, the NAV, since day one in January 2004, the firm delivered a staggering, 1413% return. Yeah. And just to put that in perspective for you, that means an original investor's capital multiplied 15 times over. 15 times. Now, you compare that to the broad market, right?
The S&P 500 delivered 399%. That's a five times multiple. Their compound annual return is 17.1% versus the index is 9.8, nearly double. They've been consistently delivering alpha for almost two decades. But the real attention grabber came in 2020. That was the year they just went orbital. PSH generated an absolutely incredible 70.2% NAV performance.
That just dwarfs the S&P 500's 18.4%. So, how did they do it? It came down to one perfectly timed, highly tactical, and uh profoundly asymmetric position. Asymmetric. Your sources detailed that 70% of the net investment gains in 2020 came from a short, sharp hedging program they put on in late February and early March.
Okay. Using what? They used index credit default swaps or CDS. All right, let's pause on the jargon because this sounds like the secret sauce. What is an index CDS and why was this position so asymmetric? So, think of it this way. A credit default swap is basically an insurance policy against a company going bankrupt.
You pay a small premium and if the company defaults, you get a huge payoff. An index CDS is just insurance on a whole basket of corporate bonds. So, they were essentially buying cheap catastrophe insurance right before the catastrophe hit. Precisely. It was asymmetric because the cost, the downside was pretty small, but the potential payoff if the market seized up was just enormous.
And that's exactly what happened. Right. the pandemic panic. As panic set in, corporate bonds plunged and the value of that insurance just soared. This one trade contributed something like 37 to 39% of gross performance in just the first half of 2020. That is just exceptional timing. But I have to ask, was this purely skill or was there some luck involved?
The sources really emphasized the move was strategic. They were betting against the market's complacency, but the operational genius that followed was pure skill. How so? They didn't just sit on the cash. They started unwinding this massive hedge, taking profits starting on March 12th. And here's the key part.
By March 18th, they had immediately reinvested pretty much all of it back into their portfolio company into Lowe's, Chipotle, all those names whose shares had just been hammered by the collapse. Exactly. They turned a defensive hedge into opportunistic offense. It's a masterclass in capital deployment.
And it continues. In late 2020, early 2021, they did it again with a new position, very large notional interest rate swapions. Okay. Another complex hedge. Break it down for us. Swapions. A swapion is an option to enter into an interest rate swap. So, think of it as a really lowcost bet that interest rates are going to rise faster than the market expects.
A bet on volatility. That's right. And notional just refers to the underlying amount the option covers, which can be massive even though the upfront cost is small. So again, huge potential payoff for a small upfront cost. Exactly. This new hedge cost only $157 million, which is just 1.4% of the fund's assets.
Tiny. But by March 2021, just months later, that position had already tripled in value to nearly 500 million. Which brings us squarely to the great paradox. With all this success, that 70% return, you'd think PSH shares would be trading at a premium. Instead, they're just stubbornly undervalued. It's the central frustration for management.
You know, the discount actually widened during the pandemic from 29% to 33% at one point. So, a third of the underlying value just vanishing. And management threw everything they had at closing that gap. They really did. They repurchased 21% of their own shares. They started paying a dividend. And crucially, insider ownership, the manager and affiliates skyrocketed from 4% to over 25%.
They put $2.4 billion of their own money in their own money, but the market just refused to budge. But why? I mean, what's the market's hangup? Is it keyman risk or maybe some of the firm's past public failures like Valent? Does that still haunt the valuation? That history is certainly part of the skepticism, but a huge factor is the complexity of the PSH structure itself.
Tell us about that. Well, PSH is a taxefficient investment holding company, not a typical US corporation. Unlike say a Berkshire Hathaway, which has to pay corporate tax on its gains, PSH is structured to avoid that layer of tax, which should be a huge advantage for long-term compounding, immensely valuable.
But because it's not a standard fund, some investors just don't understand it or find it hard to trade, and that keeps institutional money away. So, they tried to force the issue by getting into the UK's Footsie 100 index. Exactly. Index inclusion means index funds have to buy your stock, which should instantly close that discount.
But here's the supreme irony. What's that? The very thing they did to show confidence, the aggressive share buybacks, actually hurt their chances for inclusion. A financial catch 22, right? because it reduced the number of publicly tradable shares below the threshold. They actually had to convert management shares to public shares just to try and get over the line.
And when you compare PSH's performance to the actual Footsie 100 companies, the undervaluation looks just I mean absurd. It really does. PSH's long-term return on equity or RE is 17%. The Footsie 100 average is 11. Okay. In the short term, it's even more shocking. PSH's three-year RE was 39%. That is nearly five times greater than the Footsie 100's 8%.
And yet it trades for less. PSH trades at.7 times book value, while the Footsie 100 trades at 1.8 times book. It's like buying a Ferrari engine for the price of a Ford Fiestas. Now, a common argument against the fund is this idea of the PSH replicator. You know, if the portfolio is public, why not just copy it and avoid the fees?
It absolutely fails. The sources make that very clear. And for reasons that go right back to that secret weapon, the hedges. The hedges. First, replicators miss the timing. They buy after the fact. But the real dagger is that they have zero ability to participate in those undisclosed hedging transactions.
The index EDS trade, the swapions. Correct. Without those, a replicator's return in 2020 would have been a mere 15.4%. Not PS's actual 70.2% NAV return. So, the market refused to recognize the value. Management then decided to launch this completely new vehicle to disrupt things which brings us to PSTH Persing Square Tantine Holdings.
Yes, launched in July 2020. This was an enormous undertaking. They raised $4 billion with another billion committed for a $5 billion total. And the structure was meant to fix everything that was wrong with spaxs. Exactly. Management called the typical spa compensation egregious. Wrong word. What did they mean?
Well, the standard model gives sponsors 20% of the company for almost nothing, which massively dilutes shareholders. PSTH eliminated founder shares and advisory fees entirely. So, how did Persian Square get paid for their work? Through sponsor warrants. It was a 5.95% stake in the merge company, but they had to purchase them for $65 million, their fair market value.
And those warrants had a three-year lockup. Okay, that is radically different. Totally. It was all about alignment, which leads to this second just compounding valuation anomaly. PSTH, which is basically just a big pile of cash in a trust, trades at a premium, about 106% of its cash value. So, people are paying more than a dollar for a dollar in cash because they trust the management to find a good deal.
Yes. But PSH, the parent entity that owns 91% of those valuable sponsor warrants and all the other amazing companies, it still trades at that 25% discount. The market believes in the idea of a future deal more than the value of the current portfolio. It just defies standard financial logic. It really does.
And it forces you to look closer at that current portfolio. Management says its resilience comes from what they call the corporate inequality phenomenon. A fascinating phrase. What does that mean in practice? It's the belief that the crisis didn't hurt all companies equally. It actually allowed the dominant well- capitalized great companies to accelerate their market share and profitability at the expense of weaker competitors.
And we see that play out in the portfolio. Let's start with Lowe's. Yeah, Lowe's benefited massively. Consumers nesting at home drove sales growth over 26%. But more importantly, they focused on closing the margin gap with Home Depot and rolled out things like buy online, pick up in store lockers, which cemented their position.
And Chipotle is maybe the best example of this digital acceleration. Absolutely. Chipotle success was all driven by its digital transformation. Digital sales peaked at 70% of all sales. This let them accelerate new store growth with most new restaurants in 2021 featuring a Chipotle lane in that digital drive-thru.
That is corporate inequality in action. Mhm. Even a company like Agyant Scientific Equipment, they achieved organic growth and margin expansion in 2020 without furlowing a single employee. And then you have a company that got hit really hard like Hilton, right? Their business was gutted. Occupancy bottomed out at 13%.
But the thesis is that they'll gain market share post crisis because independent hotels will want the safety and brand recognition of a global giant like Hilton. And we should probably touch on Starbucks quickly. It's a great example of their discipline. They sold their first position in early 2020, then opportunistically repurchased it during the March crash, only to sell it again in early 2021 after the price doubled.
Zero emotional attachment, just discipline math. So, shifting gears a bit, the firm used this success as a platform to talk about much bigger issues like wealth inequality and the future of capitalism itself. Yeah, they raised some serious concerns. The data shows wage growth hasn't kept pace with wealth creation from the stock market and they fear this is creating a segment of Americans who feel locked out which could lead them to seek radical changes to the system.
They call it an existential risk for investors. They do and they offered two very concrete almost radical solutions to make every American an owner in capitalism. What were they? The first is ambitious government funded zerocost equity index accounts for every child born in the country. a starting deposit of say $6,750 compounding taxfree for 65 years
which they estimate could yield over a million dollars at retirement. Exactly. The second idea was mandatory equity savings similar to the super successful Australian superanuation system which has created trillions in assets. And this all ties into their philosophy on ESG, right? They believe good ESG environmental, social, and governance isn't just morally good, it's financially essential because consumers and investors will punish companies that fail to meet high standards which increases their cost of capital.
It's just the cost of doing business responsibly. Now they point to Chipotle, which now ties 10% of executive bonuses directly to ESG metrics. Their view is that capitalism is the most powerful potential force for good, but only if the incentives are aligned for long-term positive stakeholder impact.
So let's wrap up this deep dive. When we look at PSH's track record, that historic 2020 return, it really boils down to two things. First, the brilliant use of those asymmetric hedges to generate capital at key moments. M and second a disciplined focus on highquality businesses that thrive in a crisis benefiting from that corporate inequality phenomenon.
Yeah, that combination allowed them to take massive risk off the table and then capitalize on the panic. And yet the market is still struggling with that valuation anomaly. Which brings us to the ultimate question for you to consider. Building on all this material. Yeah. Given the evidence that a PSH replicator just can't work, and considering the fund's hugely taxefficient structure, does the current 25% discount actually represent an unparalleled opportunity for long-term investors?
Or is the market right to be skeptical that the promised catalyst like Footsie inclusion can ever permanently close that gap, leaving PSH forever trading below its true intrinsic value? It's a puzzle that really challenges the whole concept of an efficient market.
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