Letter to Shareholders in the 2024 Semiannual Financial Statement

Ackman contends that growing index fund ownership combined with highly leveraged short-term traders has fundamentally altered market dynamics, creating outsized price swings on modest business misses. He frames this volatility as a structural advantage for permanent-capital investors who can identify high-quality companies and hold through temporary dislocations. The firm reduced its performance fee through amendments to its investment management agreement, waiving $36 million in unrecovered IPO costs and applying a 20% reduction tied to management fees from non-PSH Pershing Square funds investing in public securities. Ackman believes lower reported fees will attract asset managers required to disclose look-through fees in regulatory filings, narrowing PSH's discount to net asset value. The firm launched and then withdrew a U.S. closed-end fund (PSUS) after determining initial IPO efforts would fall short of scale targets, though it plans to redesign the offering. In June, Pershing Square sold a 10% stake in its management company to strategic investors and established an independent board of directors. Portfolio holdings delivered mixed results through August 13, 2024. Chipotle and Alphabet drove gains, while Universal Music Group detracted sharply after reporting subscription growth deceleration to mid-single digits, though Ackman views the miss as temporary and driven by idiosyncratic factors. Hilton, Restaurant Brands, and Canadian Pacific showed solid operational momentum. Howard Hughes completed a spin-off of Seaport Entertainment and Pershing Square is evaluating a potential take-private transaction. PSH returned negative performance year-to-date through August despite what Ackman describes as strong underlying business performance at core holdings.