A Long-Term Investing Case Study: Pershing Square Holdings (PSH)

One of the advantages of long-term investing is that you don’t need to be right often, you just need to be right on a few big decisions and have the discipline to stay the course. Pershing Square Holdings (PSH) is a great real-world example of that mindset in action.

FoundryStrat have been a long-standing investor in PSH, and it neatly captures many of the principles we focus on in the long-term portfolios: quality, concentration, patience, and buying assets at the right price.

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Bill Ackman: Conviction Over Consensus

PSH is run by Bill Ackman, one of the most well-known (and sometimes controversial) investors of his generation.

What’s interesting about Ackman isn’t that he’s always right, (he DEFINITELY isn’t), but that when he is right, the outcomes tend to be very right.

Historically, some of Pershing Square’s most successful investments have come from:

• Deep fundamental research

• High-conviction, concentrated positions

• Willingness to be early (and uncomfortable)

Examples include:

• Chipotle, following its food safety crisis

• Restaurant Brands

• Howard Hughes Holdings, a long-term compounder

• The well-documented COVID hedging trade in 2020, which generated substantial profits and protected capital during extreme market stress

Not every position has worked, Herbalife being the obvious reminder, but long-term returns are driven by the winners, not the hit rate.

What Does PSH Actually Own?

A useful way to understand Pershing Square is simply to look at the businesses it chooses to own. The portfolio is intentionally small and concentrated, typically holding fewer than a dozen positions at any one time.

While holdings evolve, PSH’s core positions in recent years have included:

• Alphabet – A dominant global platform with exceptional cash generation, strong balance sheet, and long-term growth optionality through AI and cloud.

• Chipotle Mexican Grill – A best-in-class restaurant operator with pricing power, high returns on invested capital, and a long runway for unit growth.

• Restaurant Brands International – Owner of Burger King, Tim Hortons and Popeyes, benefiting from brand strength and a capital-light franchise model.

• Howard Hughes Holdings – A unique long-term real asset platform focused on master-planned communities and strategic land development.

• Canadian Pacific Kansas City – A high-quality North American rail franchise with durable competitive advantages and operating leverage.

What ties these together is not the sector, it’s the quality: strong competitive positions, cash flow durability, and the ability to compound value over many years.

A High-Quality Portfolio by Design

PSH typically runs a highly concentrated portfolio of a small number of high-quality businesses. These are generally:

• Strong balance sheets

• High returns on capital

• Durable competitive advantages

• Management teams Ackman believes can compound value over long periods

This isn’t short-term trading. The average holding period is measured in years, not quarters, exactly the type of environment where quality and fundamentals tend to matter most.

Over the long run, Pershing Square has delivered strong double-digit annualised returns (mid-teens over extended periods), despite periods of volatility and drawdowns along the way. That volatility is the price of admission for long-term outperformance. Looks at the performance below of PSH vs an MSCI World ETF (Red Line). This is a weekly price chart going back to 2018 showing PSH has delivered a circa 280% return. That's around an 18% annual return. If you compound that over 20 years it turns £10k into over £270k - not bad for one holding in your Pension or Savings account!

The Discount to NAV: Buying Quality at a Discount

One of the most attractive features of PSH today has nothing to do with stock picking, but how the vehicle itself is priced.

PSH currently trades at around a 25% discount to Net Asset Value (NAV). Historically, that discount has:

• Been volatile

• Often widened during periods of market stress

• Reached levels of 30% or more when sentiment has been particularly poor

Importantly, owning PSH is not a bet that the discount will necessarily go to zero. There is no guarantee of that, and history shows the discount can persist for long periods.

However, buying high-quality assets at a significant discount provides an additional margin of safety:

• You are paying materially less than the underlying portfolio is worth

• Returns can be enhanced if the discount narrows over time

• Downside risk is partially cushioned by the gap between price and NAV

In other words, you’re not just backing quality businesses and a proven investment process — you’re doing so at a discounted entry point.

Why This Matters for Long-Term Investors

PSH isn’t about smooth returns or avoiding short-term discomfort. It’s about:

• Backing quality businesses

• Trusting a repeatable investment process

• Staying invested through inevitable drawdowns

• And occasionally being rewarded for buying when sentiment is poor

That combination - quality + time + price discipline - sits at the heart of long-term investing and closely aligns with how we think about markets at FoundryStrat.

PSH is a reminder that the real edge in investing often isn’t speed, leverage, or prediction, it’s patience.