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The hedge fund manager is launching a publicly traded fund—and planning an IPO for his investment management firm.

Bill Ackman is one of the world’s highest-profile investors—and he’s coming for your money.

Ackman, 58, is seeking to capitalize on his celebrity status—he has 1.2 million followers on X—by

selling a New York Stock Exchange–listed equity-oriented closed-end fund, Pershing Square USA (ticker: PSUS), to investors by the end of July. Ackman’s ambitious goal, according to people familiar with the situation, is to raise $25 billion, although it’s too early to determine whether demand will be sufficient to reach that amount.

Ackman is betting that investors won’t blanch at a 2% annual management fee—steep for an actively managed fund, which typically charges 1% or less. Ackman’s Manhattan-based management company, Pershing Square Capital Management, will waive the fee for the first year and plans to invest $500 million in the new fund.

The timing is good for Ackman, who is riding high after a rough period from 2015 to 2017 when he badly lagged behind the S&P 500 index due to losses on investments such as drugmaker Valeant Pharmaceutical.

His main current investment vehicle, the London- and Euronext-listed Pershing Square Holdings, has returned 28% annually over the past five years, against 15% for the S&P 500. Since its inception nearly 10 years ago, however, the fund is trailing the S&P 500 by about four percentage points annually.

With a $10 billion market value, Pershing Square Holdings is available to U.S. investors, changing hands over the counter under the ticker PSHZF.

“Ackman made mistakes, but learned from them. That’s good. He has gotten a lot better over time,” says Bryn Torkelson, president of Matisse Capital, whose Matisse Discounted Closed-End Strategy mutual fund counts Pershing Square Holdings among its largest holdings.

Ackman’s new closed-end fund plans to take a concentrated approach and invest in 12 to 20 of what its prospectus calls “durable North American growth companies.”

That’s consistent with his recent track record, as Ackman has shed his activist mantle in recent years, given up shorting after a disaster with Herbalife nearly a decade ago, and cut portfolio turnover. Pershing Square Holdings made only one notable portfolio change in 2023, selling Lowe’s and buying Alphabet.

Some of the stocks in the new closed-end fund could overlap with Pershing Square Holdings, which is highly concentrated with top holdings in stocks such as Chipotle Mexican Grill, Restaurant Brands International, Alphabet, Hilton Worldwide Holdings, and Howard Hughes Holdings.

Ackman said in late May that he sees an “idea rich” environment for investing, with the stock market dominated by megacap growth companies such as Microsoft, Nvidia, Amazon.com, Alphabet, and Meta Platforms. He said he has added two new investments but declined to name them.

One obstacle for the new fund is that investors have an alternative in Pershing Square Holdings, which trades at a nearly 25% discount to its net asset value. It fetches $54 a share, and its portfolio value is about $70 per share.

Given the potential narrowing of the big discount, Pershing Square Holdings looks like a better bet for investors than the new fund, which is likely to trade initially in line with the value of its portfolio.

A closed-end fund issues a fixed number of shares and trades on an exchange. The fund price tracks the underlying asset value but can trade at a discount or premium to its portfolio value based on investor demand. Most closed-end funds now trade at discounts to their asset values.

The launch of the closed-end fund is tied to Ackman’s plans for his asset-management company. He recently sold a 10% stake in Pershing Square Capital Management for $1.05 billion to a group of investors, including insurer Arch Capital Group, which values the entire company at a steep $10.5 billion.

Ackman’s personal wealth soared with the sale. He owned half of the management company before the sale, valuing his stake at $5 billion; plus he owns over 20% of Pershing Square Holdings, a stake worth over $2 billion. That puts his wealth at over $7 billion.

The management company is expected to go public in 2025 after Wall Street sees how much money Ackman can raise with the new fund and other potential ventures. His firm now has about $17 billion of net assets.

A $25 billion target for the new fund is challenging for several reasons. Active equity funds are out of favor, as investors favor passive vehicles like exchange-traded index funds. The $300 billion closed-end fund market, in particular, has been moribund over the past two years with virtually no new issues. Size is also an issue—the largest existing closed-end fund, from bond specialist Pimco, totals $6 billion.

Ackman likes the closed-end structure because investors can’t redeem shares. This provides him with two main benefits. As an investor, Ackman gets staying power and scores as the controlling shareholder of his management company due to a predictable annual income stream. Raising what the industry calls permanent capital is the goal of nearly every major asset-management company—both traditional and alternative.

A 2% fee, though, is steep for a concentrated actively managed fund that could be replicated by investors. The fee also makes it harder for Ackman to beat index funds, which often charge 0.1% or less annually.

Torkelson says that closed-end funds usually wind up trading at a discount to their asset value, but notes that the new Ackman vehicle could be an exception. If a fund moves to a discount, investors can lose money if they sell it even if the portfolio increases in value.

Ackman has argued that he has delivered market-beating performance over a career of 20 years and that part of his value-add is a secret sauce of nonequity investments that can’t be easily replicated by investors. His biggest score was a pre-Covid bet against U.S. corporate credit spreads that netted over $2 billion on an investment of less than $30 million.

However, Ackman’s macro bets for Pershing Square Holdings last year—including a bullish bet on energy and another involving Japanese interest rates—cost the fund about two percentage points of performance.

Still, the new fund’s fees are more favorable than that of Pershing Square Holdings, which charges a 1.5% annual base fee and takes 16% of the fund’s gains, subject to a high-water mark.

Ackman is betting that U.S. investors will like the simplicity of the new fund and its domestic listing. But even with the higher fee structure, Pershing Square Holdings looks more appealing than the new fund, given its large discount to its NAV and the steps that Ackman is taking to narrow that discount.

The initial public offering of the new fund could help narrow the discount on Pershing Square Holdings by reducing the incentive fee on that fund to 16% based on a formula. The larger the IPO, the bigger the fee reduction.

One knock against Pershing Square Holdings is that it can be tough for U.S. retail investors to buy through some brokerage firms due to the offshore listing. The fund also generates a so-called PFIC tax form that is more like a K-1 for master limited partnerships than a simpler 1099.

Tax expert Robert Willens says the tax treatment “is not the ideal scenario for U.S. investors.” But he adds that PFIC funds are taxed “identically to a partner in an MLP,” which hasn’t deterred many investors from buying MLPs.

Barron’s has written favorably on Pershing Square Holdings as a way to invest alongside Ackman at a big discount, which has been over 35%. We have been critical of the fee structure as high, particularly since there is no hurdle rate to earn it.

During 2023, Pershing Square earned a management fee of $155 million and $312 million of incentive fees. The fund, which returned 26.7% after fees last year based on its NAV, narrowly topped the S&P 500, which returned 26.2%.

Ackman has a small investment organization with about 40 people in total, including eight investment pros. Pershing Square’s fee bonanza last year meant that 13 key staff members shared over $300 million, or an average of more than $20 million each, according to the fund’s annual report.

The new fund probably will target retail investors, and Ackman’s name recognition will help. No major investor has a bigger social-media presence than Ackman, although he usually avoids investment-oriented topics.

A Harvard University graduate, Ackman is a strong supporter of Israel and a critic of diversity, equity, and inclusion policies. He helped marshal opposition to Harvard President Claudine Gay, which led to her departure from the post in early January.

Ackman also has been a critic of President Joe Biden, citing what he views as Biden’s declining mental acuity.

“We should all be embarrassed as Americans that this is the candidate the Democratic Party has chosen,” Ackman tweeted this past Thursday after Biden’s appearance at D-Day ceremonies in Normandy. There have been reports that he is leaning toward supporting Donald Trump in November.

Ackman’s activities have made him catnip for the media, with long articles appearing about him in the New York Times and Washington Post this year. The Post wrote that “Ackman’s evolution mirrors many elites who, like the hedge fund manager, see themselves as moderates and not culture warriors.”

Ackman’s management company, Pershing Square Capital Management, will likely be one of the priciest investment firms after its IPO based on the recent sale of the 10% stake.

One valuation metric is market value relative to assets. Traditional asset managers like BlackRock are valued at 1% to 3% of assets, while higher-fee alternative managers like Blackstone, Ares Management, and Blue Owl Capital are valued at 10% to 15% of assets. Pershing Square is valued at nearly 60% of assets.

If Pershing Square gets to $50 billion in assets next year from a successful new fund, other potential ventures, and asset appreciation, the company would be valued at about 20% of assets, still higher than peers. That’s an optimistic scenario.

The bull case is that Ackman has a small organization and can generate very high margins, especially as assets grow. Key-man risk, however, is high at Pershing Square because the company is so identified with Ackman. That argues for a lower valuation on the management company, especially with Ackman approaching 60.

In the near term, the focus will be on the new fund and whether Ackman can pull off the tough feat of selling a huge actively managed fund at a time of weak investor demand.

Ackman has beaten the odds before. He’ll have to do it again.

Mother and daughter join artistic director Kim Jones to talk about the forging of a ‘new chapter’ at the luxury powerhouse

Fendi is undergoing a bit of a shake-up. Not only is it sitting out Haute Couture week in Paris in June, an executive reshuffle is also on the way: the brand’s chief executive of six years, Serge Brunschwig, is transitioning to a new, soon-to-be-announced role at parent company LVMH; taking his place at Fendi is Pierre-Emmanuel Angeloglou, who will also retain his current role as managing director of LVMH’s Fashion Group (the division that houses brands including Pucci, Kenzo, Stella McCartney and Marc Jacobs).

But as questions swirl around Fendi’s future direction amid the broader changes at LVMH, Silvia Venturini Fendi, a third-generation member of the Fendi family and also artistic director of accessories, menswear and kidswear, is keen for the company’s 100th anniversary, officially happening next year, not to be overshadowed.

Her line of sight, she tells the Financial Times, speaking from Fendi’s headquarters in Rome, is short. “If you have an idea, you need to do it immediately because fashion changes so quickly. It [requires us] to live in the moment. If you look at our history and the things we have done, it proves that we are always open to new ventures,” she says, referring to recent sold-out collaborations with game franchise Pokémon and Hiroshi Fujiwara’s streetwear label Fragment.

“And for the moment, we have this celebration.” The celebration that Venturini Fendi is referring to is Fendi’s new line of seven fragrances, unveiled over a two-day event last week in Rome. The launch creates a new entry point for customers who, she notes, have already expressed clear interest in fragrances. And Fendi won’t stop there. “I think beauty, including fragrances and makeup and skincare, is so important today, so relevant, and I think it’s gonna be great too. But let’s see, let’s start with [perfume].”

Fendi is LVMH’s fourth-biggest fashion brand, according to HSBC estimates, with revenues deriving predominantly from accessories and leather goods, analysts say (it was Venturini Fendi who designed the 1997 Baguette that is widely considered as one of the world’s first “it” bags). Yet it is one of the last remaining LVMH-owned houses that does not sell beauty, making it an anomaly among peers such as Loewe, which launched its first perfume in the 1970s, and Celine, which reintroduced fragrance in 2019 and launched its first cosmetics line in March.

Previously, the Italian brand licensed out scents such as Fendi by Fendi, L’Acquarossa and Fan di Fendi. “[They] were also very successful but we stopped [them] over time,” Venturini Fendi says, declining to comment on when they ceased production. Its latest move into beauty marks “a new chapter” for Fendi, as its new €300 fragrances are manufactured entirely in-house, without the help of a larger manufacturing partner such as L’Oréal or Estée Lauder.

The beauty and fragrance sector is packed with offerings from specialists such as Coty and Interparfums and an ever-growing pool of celebrity and influencer brands. Still, the category continues to be attractive to luxury executives because of its resilience in economic downturns. The super premium beauty and personal care sector is expected to grow 6 per cent from $58mn in 2023 to $61.6mn in 2024, according to Euromonitor International.

When it comes to beauty, a majority of luxury brands still work with an external partner or parent company. Armani, Valentino and Prada have signed with L’Oréal; Tom Ford and Balmain operate under Estée Lauder; Paco Rabanne and Dries Van Noten are run by Puig; and Gucci, Burberry and Marc Jacobs are licensed to Coty.

But a growing number of companies, including Chanel, Hermès, Dolce & Gabbana and LVMH-owned Louis Vuitton, Dior and Celine, handle their own beauty product development and manufacturing. Luxury groups Richemont and Kering also recently launched new beauty divisions with the aim of scaling fragrance among other products. Fendi joins this crowd: its new perfumes will only be distributed through its retail network via physical stores and ecommerce, from June 20. Going into it alone can be an expensive and intricate process. But if navigated properly, the financial reward can be significant.

“It is never too late for a luxury brand to develop its beauty segment, provided that the product line is coherent with the overall brand image and ethos and it has a distinctive point of view,” says Mario Ortelli, managing partner of Ortelli&Co, a strategic and M&A advisory firm for luxury companies. “If well executed, it gives the opportunity to reach a wider consumer base with attractive price points without diluting brand equity,” he adds.

The Fendis are betting on personal nostalgia and relatable memories to resonate with customers — an approach that Celine’s artistic director Hedi Slimane and Victoria Beckham have also taken with their recent fragrance launches. Created with the expertise of perfumers Quentin Bisch, Fanny Bal and Anne Flipo, each Fendi scent was “conceived with a loved one in mind,” says Delfina Delettrez Fendi, daughter of Venturini Fendi and artistic director of jewellery. 

La Baguette, for example, designed to resemble a lazy Sunday with its floral and vanilla notes, was inspired by Delettrez Fendi’s twin children, while Sempre Mio, made of bergamot, cedarwood and orange blossom, reflects her memories of the Ourika valley and Atlas foothills, just outside Marrakech, a place where the designer feels that she belongs (she is part Moroccan). 

With Prima Terra, which features tangerine, rosemary and oak moss, Kim Jones, artistic director of womenswear and haute couture, took inspiration from Southern and Eastern Africa, where he grew up. “Ideas stemmed from chats about childhood memories and the things close to our hearts,” he says.

Each of the simple rectangular bottles comes in a pastel hue — a reflection of the Roman sunset, the designers say. “We wanted something very clean, something that represented Rome but also something that represented Fendi now,” Jones elaborates.

In addition to a full-sized 100ml bottle, the brand will sell a discovery set, also priced at €300, allowing customers to try all seven fragrances in 10ml formats at the price of one. Fendi has also created a miniature leather charm case, €290, that allows the wearer to carry the scent with them.

Are the Fendis confident that something so intimately personal to them will resonate on a global scale? “You can never be sure,” admits Venturini Fendi, who created the French and spicy scent Perché No, which translates to “why not?” to express her personal mantra. But she hopes its “clean, reposing and calming” qualities will appeal to the brand’s fans. 

“You know when there is [something] that you love. You don’t know why; you cannot give yourself a reason, but you feel emotional the moment something clicks. It moves something inside,” she says. “And that’s what we want [people] to feel.”

Another slow week for funding — the third straight after a significant pick-up in large rounds earlier this year. Xcimer Energy led the way, as it was the only startup to lock up a nine-figure round. The dog days of summer seem to already be here in the venture world.

1. Xcimer Energy, $100M, energy: Well, fusion funding was down — until this happened. Denver-based Xcimer Energy announced it raised a $100 million Series A led by Hedosophia. The company is working on laser-driven inertial fusion and will use the funding to build a prototype laser system including what it calls the “world’s largest nonlinear optical pulse compression system.” Founded in 2022, Xcimer has raised nearly $118 million, per Crunchbase — including a $9 million in grant funding from the U.S. Department of Energy’s Milestone-Based Fusion Development Program.

2. Pika, $80M, artificial intelligence: It never takes us long to get to an AI startup on this list. Pika, an artificial intelligence startup that generates video, raised an $80 million round led by Spark Capital that values the Palo Alto, California-based company at $470 million, per Bloomberg. Notably, actor and singer Jared Leto also is an investor. Pika is part of a growing group of startups building text-to-video AI software. Founded in 2023, the company has raised $135 million, per Crunchbase.

3. (tied) Prolific Machines, $55M, biotech: Unlike in previous weeks, there was no huge biotech round. The biggest this week went to Emeryville, California-based Prolific Machines, which raised a $55 million Series B led by the Ki Tua Fund, the corporate venture arm of Fonterra Co-operative Group. The startup’s platform allows commercial customers to more efficiently produce biological products through the use of light for things like cellular agriculture and nutritional protein production. Founded in 2020, Prolific has raised $86.5 million, per the company.

3. (tied) Restor3d, $55M, 3D technology: Restor3d, a North Carolina-based maker of 3D printed personalized orthopedic implants, locked up a $70 million financing — even as investors continue to cool on 3D tech startups. The round includes a $55 million Series A round led by Summers Value Partners and existing investors plus an additional $15 million in debt financing led by Trinity Capital. The startup plays at a unique intersection of healthcare/biotech, AI and 3D technology. The firm uses biomaterials, 3D printing technologies and AI to help repair the human body. It is planning to introduce new implant systems for total ankle and shoulder replacements, offering 3D printed solutions that fit the unique anatomy of the individual patients. Founded in 2017, the company has raised nearly $150 million, per Crunchbase. While the 3D tech sector saw big money in 2021 and 2022, the past two years have seen the sector come back down to the new reality. Although VC-backed startups in the sector saw more than $2.4 billion invested in 2022, that number dropped to only about $1 billion last year, per Crunchbase data. It is on a similar trajectory this year, with only about $424 million raised thus far.

5. (tied) Osteal Therapeutics, $50M, biotech: Dallas-based Osteal Therapeutics raised a $50 million Series D led by Zimmer Biomet. The biotech startup is developing new drug/device therapies for orthopedic infections. The company’s development strategy is to use approved drugs as candidates for new routes of local, concentrated delivery. Founded in 2013, the company has raised nearly $113 million, per Crunchbase.

5. (tied) Twelve Labs, $50M, video: Yet another AI-related video startup. San Francisco-based Twelve Labs, a developer of video foundation models to make video searchable, raised a $50 million Series A co-led by new investor New Enterprise Associates and NVentures, Nvidia’s venture capital arm. The startup’s generative AI foundation models allow users to input natural language prompts that can find precise moments in large libraries of videos — potentially saving hours of time. Founded in 2021, the company has raised $77 million, per Crunchbase.

7. AcuityMD, $45M, medtech: Boston-based AcuityMD, a commercial platform to identify target markets in the medical industry, locked up a $45 million round led by Iconiq Growth. Founded in 2019, AcuityMD has raised more than $83 million, per the company.

8. Eko Health, $41M, health care: San Francisco-based Eko Health, which uses artificial intelligence for early detection of heart and lung diseases, raised a $41 million Series D. No lead investor was announced. Founded in 2013, the company has raised approximately $169 million, per Crunchbase.

9. SpyCloud, $35M, cybersecurity: Austin, Texas-based SpyCloud, a cybersecurity firm that tries to stop account takeovers, announced a $35 million round from CIBC Innovation Banking. Founded in 2016, the company has raised nearly $204 million, per Crunchbase.

10. Advanced Medicine Partners, $32M, biotech: North Carolina-based Advanced Medicine Partners, a developer of advanced medicines, received $32 million in financing led by Deerfield Management. Founded in 2023, this is the company’s first announced round, per Crunchbase.

Gregoire Tournant, the former chief investment officer at Allianz Global Investors U.S., pleaded guilty to two counts of investment adviser fraud

A former Allianz fund manager who ran the investment group responsible for steep losses the firm suffered during the 2020 market meltdown sparked by the Covid-19 pandemic pleaded guilty to fraud charges.

Gregoire Tournant, the former chief investment officer at Allianz Global Investors U.S., pleaded guilty Friday before Judge Laura Taylor Swain in the U.S. District Court for the Southern District of New York to two counts of investment adviser fraud. He also agreed to forfeit about $17 million as part of his plea. He faces up to 10 years in prison and will be sentenced on Oct. 16.

Tournant, 57, of Basalt, Colo., has faced conspiracy, securities fraud, investment adviser fraud and obstruction of justice charges since 2022.

Prosecutors in Manhattan alleged that the set of Allianz Global Investors’ private funds co-managed by Tournant suffered losses of more than $7 billion during the March 2020 market selloff. The funds were eventually shut down.

Tournant and his co-conspirators allegedly also misled investors, largely institutional investors such as large pension funds, by marketing the funds as protected from a sudden market crash with particular hedges. He also touted the protections the funds received within Allianz, one of the world’s largest financial and insurance companies.

Attorneys for Tournant and a spokeswoman for the federal prosecutors’ office in the Southern District of New York declined to comment.

Based on the findings the firm shared with U.S. authorities, the case against Tournant appeared strong, said a person with knowledge of Allianz’s thinking, adding that the firm is pleased that Tournant is “finally taking ownership for the deception he led.”

Friday’s guilty plea capped a contentious proceeding with Tournant as part of the investigation into one of the biggest early casualties of the stock market crash caused by the coronavirus. Investors, including pensions that managed the retirement plans of Arkansas teachers, Milwaukee city employees and New York City subway workers, lost billions on the funds.

Tournant last year accused federal prosecutors in the case of committing ethical breaches by turning his own lawyers against him. He said prosecutors encouraged lawyers that were acting both for the firm and for him personally to later switch sides and use his privileged communications to help build a false narrative against him. Judge Swain in August declined his request to throw out fraud charges against him, citing the terms of a joint defense agreement the executive entered into with the firm’s counsel.

Allianz Global Investors U.S. in May 2022 pleaded guilty to securities fraud and agreed to pay about $6 billion in penalties and restitution to investors of the funds, known as Structured Alpha funds. The firm also admitted it lacked internal controls and oversight for a series of private-investment funds and made false and misleading statements to investors, according to a plea agreement reached with the U.S. attorney’s office in Manhattan.

Two former Allianz Global Investors U.S. employees also pleaded guilty in March 2022 in connection with the scheme, according to the Justice Department.

UN agency says aquaculture boom will boost food security but critics say it harms fragile marine ecosystems

The UN agency expects global aquaculture production to surge to 111mn tonnes by 2032 and the amount of caught fish to rise more moderately, reaching 94mn tonnes within the same period. 

The increase would be necessary to provide a growing world population with sufficient protein and ensure food security, said Barange.

Africans consumed only around 9kg of fish per person per year, he noted. Just to maintain that level between now and 2050 amid projected population growth, the aquaculture sector would need to expand by nearly 75 per cent, according to the FAO.

“If we are in the business of feeding people, we have to be able to provide that,” he said, adding that the industry was not only a tool for ending hunger but also provided employment.

Barange rejected claims that aquaculture damaged local ecosystems. “Is the growth in aquaculture putting more impact on the marine environment? The answer to that is fundamentally no,” he said.

Some 40 years ago, as much as 40 per cent of wild-caught fish was used for animal feed but this was now down to less than 20 per cent, he said. In the past, around 3kg to 4kg of fish meal was required to produce 1kg of a farmed fish such as salmon, he added. But different feed formulations meant this was now down to 1kg of fish meal to produce 1.2kg.

On average across all fed aquaculture species, 1kg of fishmeal produced 4kg of fish, and for prawns, shrimps and salmon around 90 per cent of feed was vegetable-based, Barange said. This evolution had allowed aquaculture “to grow without using more fish from the ocean”.

But critics say the industry’s practices for sourcing feed harm food security in poorer countries — hoovering up small species on which communities rely in order to manufacture fish meal for the farms. They also argue that overuse of antibiotics to treat disease in farmed fish is exacerbating the rise of drug-resistant pathogens and that waste from the farms pollutes and harms the environment.

“All food systems have challenges,” acknowledged Barange. But for the FAO, “sufficient, accessible and healthy foods are non-negotiable objectives”.

The UN agency has negotiated new guidelines for sustainable aquaculture, which will be approved by the FAO fisheries committee in Rome next month. These lay out “basic principles for aquaculture, including biosecurity, disease control and limiting environmental impacts”, said Barange.