Pershing Square Inc. became the first hedge fund to market directly to U.S. individual investors following a 2025 Securities and Exchange Commission policy shift.

BofA analyst Craig Siegenthaler said Pershing Square combines a rare mix of permanent capital, premium fee economics and long-term compounding potential.

"PS earns a ‘royalty on compounding' and is looking to replicate Berkshire," the analyst wrote, describing the structure as a "Baby Buffett" model.

Permanent Capital Is The Core Advantage

According to the report, 96% of Pershing Square's fee-paying assets under management are permanent capital that cannot be redeemed.

That gives the firm a major structural advantage over traditional hedge funds and private equity managers, which often face redemption pressure or fundraising cycles.

"Pershing Square benefits from an unusually stable AuM base with 96% of fee-paying AuM in permanent capital vehicles," BofA said.

The report noted the structure allows Ackman's firm to hold concentrated investments for years without being forced to liquidate positions during periods of market stress.

"Pershing Square effectively earns a royalty on long-term value creation through its fee structure and investment approach," the analyst said.

Ackman's Brand Is Becoming An Asset

BofA highlighted Ackman's high-profile investing style and social media presence.

"In our view, Pershing Square and Bill Ackman have built one of the strongest brands in asset management," Siegenthaler wrote.

The report pointed to Pershing Square's long-term track record, including net annualized returns of 16% since inception versus 11% for the S&P 500.

BofA also highlighted Pershing Square's scalable economics.

The company posted an operating margin of roughly 88% in 2025, benefiting from a lean investment team and relatively low fixed costs.

Why BofA Stayed Neutral On The Stock

Despite the bullish long-term narrative, BofA stopped short of assigning a Buy rating on Pershing Square.

The bank cited valuation concerns, concentrated portfolio risks and heavy dependence on Ackman himself.

"Our price objective implies a 20% total return and is derived from a 45x multiple on our 2028 EPS estimate," the report said, far above the roughly 18x average multiple for alternative asset manager peers.

Siegenthaler’s caution also centers on earnings volatility. Pershing Square holds concentrated stakes in just 12 to 15 companies, versus 50 to 150 for a typical long-only fund and 500-plus for an index fund.

That concentration drives the outperformance — and the air pockets.

BofA also warned about "key man risk" tied to Ackman.

"Any reduction in his involvement, whether due to retirement, political ambitions, or other pursuits, could impact investment performance and fundraising," the report said.

Another concern is the persistent discount to net asset value at Pershing Square Holdings, the firm's London-listed closed-end fund.

BofA noted the vehicle has historically traded at a 20% to 30% discount to NAV and has never traded at parity since launching in 2014.

Shares of Pershing Square rose 1.1% on Tuesday and they have risen about 50% since going public last month.

Photo created by Midjourney, Dall-E