Pershing Square's Share Buyback: A Strategic Move for Long-Term Growth
Friday, Jan 31, 2025 3:53 pm ET
1min read Pershing Square Holdings, Ltd. (PSH) has announced a significant share buyback program, with a total value of $100,000,000, set to commence following the completion of the previously announced $100,000,000 share buyback. This strategic move aligns with PSH's long-term investment strategy and objectives, aiming to maximize its long-term compound annual rate of growth in intrinsic value per share.
As of 13 December 2024, PSH had completed 29.3% of the previously announced $100,000,000 share buyback program. In this period, PSH repurchased a total of 598,409 PSH Public Shares at an average price of $48.92. Since commencing its first share buyback program on 2 May 2017, PSH has repurchased 66,551,162 PSH Public Shares for a total of $1.4 billion at an average price of $21.06.
The larger size of the new buyback program is intended to reduce the risk that it is exhausted during a period when there are trading window restrictions on new authorizations. This demonstrates PSH's commitment to returning capital to shareholders and its confidence in the company's financial health and future prospects.
The buyback program also reduces the number of outstanding shares, which can increase earnings per share (EPS) and net asset value (NAV) per share. For instance, after the buyback announced on 28 January 2025, PSH has 182,145,667 Public Shares outstanding, excluding the 28,811,083 Public Shares held in Treasury. This reduction in outstanding shares can lead to an increase in EPS and NAV per share, as the same amount of earnings or assets is now spread over fewer shares.
Moreover, PSH's investment manager, Pershing Square Capital Management, L.P. (PSCM), focuses on high-quality businesses with limited downside and predictable, recurring cash flow. By repurchasing shares when the market price is below the intrinsic value, PSH can create value for its shareholders. This strategy is consistent with PSCM's approach of managing risks through careful investment selection and portfolio construction.
In conclusion, PSH's share buyback program is a strategic move that aligns with the company's long-term investment strategy and objectives. By reducing the number of outstanding shares, increasing EPS and NAV per share, and creating value for shareholders, PSH demonstrates its commitment to long-term growth and shareholder value.
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