Pershing Square's Real Problem Is Not the 12.6%, It Is the 35%

Pershing Square Holdings told shareholders that its net asset value per share fell 12.6% in the first half of 2026, against a positive 10.2% total return for the S&P 500 ^[1]. The 22.8 point gap ^[2] is the headline, but the operative number sits a few paragraphs later: PSH stock currently trades at a 35% discount to NAV ^[5], which makes every new position the fund takes a comparison against buying itself.

Start with the half-year figure, because it is already stale. The letter reports year-to-date NAV performance through August 11, 2026 of negative 4.3%, versus positive 13.7% for the index ^[3]. Working from those two data points, NAV rose roughly 9.5% between June 30 and August 11 while the index added about 3.2% [c4a][c4b]. So the drawdown compressed quickly. The discount did not.

The compounding cost is now legible in the fund's own long-run numbers. Investors who entered Pershing Square, L.P. at its January 1, 2004 inception and moved to PSH at its December 31, 2012 launch have compounded at 15.6% a year over nearly 23 years, a 26-times multiple, against 11.0% and 11 times for the S&P 500 ^[6]. On stock price rather than NAV, the same investors earned 13.5%, an 18-times multiple ^[7]. That is 2.1 points of annual return ^[20] and eight turns of original capital ^[8] surrendered to the discount; the price multiple is 69% of the NAV multiple ^[9]. The letter attributes the shortfall directly to the 35% discount ^[5].

The stated remedy is a preference, not a mechanism. Ackman writes that "our strong preference is for PSH's shares to trade at or around intrinsic value," for which he believes NAV per share is a conservative estimate ^[19]. Meanwhile the capital went outward. The letter discloses six new investments: Visa, Mastercard, Netflix, S&P Global, Intercontinental Exchange and Alcon ^[14], alongside existing holdings including Microsoft, Amazon, Meta, Uber, Brookfield and Restaurant Brands ^[15]. Management expects every portfolio company to grow EPS at 15% or more annually over the next three to five years, with about half above 20% ^[16], and says all current holdings trade at multiples significantly below where it expects them to trade ^[17].

The arithmetic of the alternative is not subtle. At a 35% discount, a dollar spent on PSH stock buys about $1.54 of NAV, a 54% uplift in NAV terms before any thesis has to work ^[18]. That is a higher hurdle than most of the six new names need to clear, and it requires no new diligence. The offset is that repurchases buy the existing book, not fresh ideas, and shrink an already fee-bearing asset base.

The letter's explanation for the first-half miss is market breadth. Two of the S&P 500's 24 sectors, semiconductors and tech hardware and equipment, at 8% of companies and 22% of market capitalisation, contributed nearly 85% of year-to-date gains ^[10]. More than 90% of index constituents delivered under 2% of the return ^[11], and nearly 40% fell ^[12]. Ackman frames that as an attractive environment in which to deploy capital ^[13]. It is also a reasonable description of why a concentrated, non-AI book lagged by 22.8 points ^[2].