Pershing Square Sells Stake in Management Company

Pershing Square has sold a 10% stake in its management company for USD 1.05 billion. Last year, Pershing Square Holdings, its listed hedge fund that makes up most of its assets under management (we have 5k shares in it), made around USD 400 million in management and performance fees. Even if we assume that most compensation of employees is through dividends and share appreciation rather than salaries, that makes the P/E of the management company around 25, which is very high for an asset management company, especially one depending on variable performance fees. Regal Partners - an Australian listed hedge fund manager that I am invested in (13k shares) - has a forward P/E of about 15. Rather, Pershing Square's high P/E is predicated on raising a new USD 25 billion listed fund in the US. At 2%, this would produce management fees of USD 500 million per year! The fees of the existing Pershing Square fund listed in London will be reduced by part of the management fees on the new fund, so the $500 million isn't purely accretive. Previously Ackman said that they planned to raise USD 10 billion for the new fund.