Pershing Square Holdings, Ltd.

Hello and welcome to the third quarter 2024 investor call for Pershing Square. Today's call is being recorded. It is now my pleasure to turn the call over to your host, Bill Ackman, CEO and Portfolio Manager.

Thank you, Operator, and welcome to the call. As usual, we distributed a legal disclaimer, which is also on our website. We receive a lot of questions in advance of the call. We'll do our best to incorporate those questions and the answers to them in our responses, and if we have more time, we'll get to any questions we didn't or were unable to address. If after the call you still have further questions, please contact IR at persq.com. A recording of our call will be available for two weeks until December 5th on 2024. Why don't we start by walking through the portfolio? Actually, maybe we'll start with a kind of more high level. You know, we've had obviously very significant events politically in the last couple of weeks, Trump being elected and a fairly popular vote going to the new president, returning president, as well as control of the Senate and the House, you know, The question obviously is what are the implications for Pershing Square, what are the implications for the economy, the portfolio? So we view the new Trump administration as a very favorable opportunity for the country, the economy, and ultimately our portfolio. We think there's an opportunity here for us to step into a period of accelerating growth. This is the first time in my lifetime that we've actually taken a serious look at efficiency and the bureaucracy that has impeded our business performance. I've always thought of the United States as a bit like a Pershing Square investment, an amazing, great business of enormous scale, great brand, but it's been undermanaged, and I think we have the chance and the potential and hopefully the likelihood of much better business management. Trump is going to be a pro-growth candidate. President, he campaigned on that theme. You know, unusually, first time in my lifetime, we see major business figures, Elon Musk, stepping in, partnering with the President to help accomplish a government efficiency project, what sounds a bit like zero-based budgeting in terms of their approach to setting up each of these various departments, looking at every agency and their contribution or lack thereof to what the country needs to accomplish. and then recruiting the right people and putting them in the right seats to make this be a big success. So I would say I am optimistic. I think as a firm, as an investment team, we're quite optimistic about what the potential for this is. You know, we start with an over-levered or certainly a highly levered relative to where we've been historically, $36 trillion of leverage. You've got to compare that, of course, with the value of the U.S. economy, the best economy in the world right now of scale. and we think the opportunity is for GDP growth to accelerate. And if we can both become much more efficient, GDP growth can accelerate. We think magic can happen in a way that's quite bullish for the country and for businesses in our country, small, medium, large, and, of course, the large, great public companies of which we are a significant investor. And we've, you know, notably, I would say the business community, whether people voted for Kamala Harris or President Trump, I would say to a person, they are excited about the potential for the economy. And that's relevant because business confidence is a key factor in, you know, decisions regarding a new factory, a new investment. With respect to the sort of M&A environment, a lot of transactions were paused. I had lunch with one of the major bankers to the M&A space, CEO of one of the big advisory firms yesterday, and I would say he could not be more bullish. At least he had visibility certainly for the next 18 months of transactions, and I was lucky to grab a few minutes with him for lunch because of how busy he was. they are. And so, you know, I think we have the potential, you know, on a very positive side, lifting all boats with dramatic improvement in the economy. The risk, I would say the risk that people are concerned about, and we have obviously some concern about, is when you see a, you step on the accelerator, you know, that can lead to an increase in inflation and could lead, of course, to a higher interest rate environment, you know, depending on You know, if the growth comes from productivity and efficiency and reduced costs, that will ameliorate the risks, I would say, to inflation. Energy prices, I was driving home yesterday, you know, a couple days ago from New Jersey, and I saw $2.60 gas, which I haven't seen in a while. That, of course, is a big mitigant to inflation. But, you know, there's risk, I would say, there's risk to putting the pedal to the metal, but I think it's absolutely the right, you know, approach. for the country, and we're going to have a very sophisticated economic team. We don't yet know who the Treasury Secretary is, but at least the names that have been surfaced, we think are excellent candidates, and the President's going to have a lot of help from many people who want to see the United States succeed. I also think we've been suffering with two major wars that have been underway now for a material thousand days for Russia, Ukraine, and, you know, year plus in the Middle East. And even from that perspective, we are more bullish about the potential for those wars being resolved. I think the Iranian situation is sort of a yet to be resolved and still remains a very significant risk factor. You know, Putin sending a warning signal by launching an ICBM last night, even one without warheads, obviously without nuclear warheads, you know, it's obviously concerning. but I do think that the world will be a safer place going forward with the perceived strength and reality of more strength in the executive branch of our country. And so I would say we are very constructive on the business setup. With respect to Pershing Square this year, I would say we're certainly an underperformer relative to the stock market. One of the businesses, at least the stocks that's holding us back is Universal Music. So why don't we start there? It's a large position, our largest. It's down year-to-date. 13%, 14%. 13%, 14%. Obviously, that holds back our results. One way to think about, if you own a great business and the business continues to compound in underlying value and the stock price gets cheaper, it's a bit like a rubber band and that gets pulled in a certain direction. At some point, we would expect it to snap back. But go ahead, Brian, why don't you speak to it?

Sure, thank you. And so as Bill mentioned, Universal has declined materially this year and is a large position. It's been a significant headwind to our overall performance figures for the portfolio. I think in putting the results in context and understanding why the stock is down, it's actually helpful to step back and think about Universal in two different phases. I would say phase one would be from when we made our investment in sort of late summer, early fall of 21 until it reported its second quarter. of earnings this year in July, and then what's happened since July.