Billionaire investor Bill Ackman on Thursday placed responsibility for the steep drop in the stock price of his newly public fund squarely on retail investors, saying many bought more shares than they could pay for and were forced to sell, pushing the shares lower.
Pershing Square USA, the newly listed closed-end fund, debuted at $50 and plunged to $40.90 on Wednesday - a decline Ackman described as the result of retail participants falling into technical pitfalls. By Thursday, the shares had climbed over 6% to $43.54, but remained below the IPO level.
On a conference call with foreign journalists held on the tarmac in Montreal - a call arranged to comply with U.S. securities regulations that prevented U.S. journalists from listening in - Ackman said retail investors "don’t know how to invest in IPOs," and that many allocated shares but lacked the cash to complete the purchases.
"We had a whole bunch of people dump that stock yesterday for technical reasons," he said, offering that forced selling by those retail buyers contributed to the roughly 18% one-day decline. At the same time, he noted that institutional investors accounted for more than 80% of the capital raised in the offering, which raises questions about how retail flows alone could explain the full extent of the move.
The IPO generated $5 billion of proceeds, increasing Ackman’s overall assets by about 25%. In addition to the capital raised from outside investors, Ackman told journalists he and his employees put in roughly $500 million in cash to the new vehicle. He also said that fellow fund manager Marc Lasry and ICONIQ Capital - the family office associated with Meta Platforms founder Mark Zuckerberg - participated in the investment.
Investors who purchased five shares of Pershing Square USA at the IPO received one share of Ackman’s management company, Pershing Square Inc, as a gift. That management company’s stock rose 20% to $29.18 after opening at $24 on Wednesday.
Ackman said Pershing Square USA’s portfolio will closely mirror the positions held in Pershing Square Holdings, the closed-end fund listed in London. Major names included among the holdings are Alphabet, the parent of Google, and Meta Platforms, companies already part of the London fund.
Performance metrics for the London-listed vehicle were also discussed on the call. Pershing Square Holdings delivered an annualized return of 7% between 2015 and 2025, a figure that trailed the S&P 500’s 11% annualized gain over the same decade. Ackman acknowledged that while recent successful AI-related bets have produced strong returns, they have not entirely offset losses from earlier, costly positions a decade ago in companies such as Valeant Pharmaceuticals and Herbalife.
Looking ahead, Ackman indicated he is inclined to launch an additional fund within the coming year, possibly even before year-end, though he did not provide a firm timetable beyond that horizon.
Context and mechanics
The fund’s opening sequence highlights several mechanics that affected early trading: an initial IPO price of $50, a rapid intraday drop to $40.90, and a partial recovery to $43.54 the following day. The pairing of the new closed-end fund with an allocation of management company shares for small purchasers aimed to broaden access, a prominent theme in Ackman’s marketing of the listing. Yet the early price action exposed vulnerabilities when retail allocations meet cash constraints and short-term selling pressures.
Capital and ownership
More than 80% of the offering’s capital came from institutional investors, according to Ackman, while he and his team committed about $500 million in cash. The $5 billion raised boosted the size of Ackman’s asset base materially.
Performance track record
While Pershing Square USA will reflect positions held in Pershing Square Holdings, the London fund’s annualized 7% return over 2015-2025 lags the S&P 500’s 11% pace for the same period. Ackman pointed to strong recent returns from AI-focused bets as positive contributors, but said these gains have not fully made up for the impact of earlier losing wagers.