PSH-ing up Part One

Review of OB25 for 25 idea Pershing Square

Dear reader,

It’s interesting to look back on my PSH missive “PSH-teecuff” from last November and “Fannie Mae” fom February.

Quite a bit has moved on, and some is unchanged. New portfolio holdings of Amazon, Hertz and Uber. A scale back from Universal.

This is the current, known holdings:

I’ve added the new holdings to the last reported NAV of $17.4bn (up $3bn in 2025) but do not know the relative current weightings of holdings are although $3.77bn of Amazon, Hertz, Seaport and Uber, and a reported $0.9bn increase at Howard Hughes, while reductions have potentially occurred at Universal and Chipotle.

Incredibly, PSH trades on a 36.8% discount to its NAV as at 31/7/25 despite rising 9% since I included this idea 8 months ago. It is actively seeking to close that discount.

Let’s consider its last reported holdings:

#1 Universal

Despite PSH selling down some of its holding, UMG released a pleasing 2Q25 result with net profit and EPS up 56% yoy.

It remains a dominant force in US music….

And across the world. It enjoyed substantial expansion into China in 2025.

#2 Alphabet

Earnings of $2.31 a share grew by 22% yoy and puts this at 20X price earnings, incredibly despite doubling in price in just over two years.

Adwords continues to deliver double digit growth, along with YouTube Ads but the noticeable growth is subscriptions particularly to YouTube. Consumption of media on YouTube has reached a point where it rivals the content from streamers, except rather than paying for TV Studios and Production Teams to generate content a small army of content producers churn out vast amounts of specialised content. The video that I recorded on YouTube about PSH probably being a great example of that!

#3 Hilton

Hotelier Hilton forecasts a 2025 RevPAR at constant current of 0%-2% growth with diluted EPS is projected to be between $6.82 and $6.99 putting this on a PE of 37X.

Pricey? Yes and you buy into a global growth story that is a franchise model, so capital light and that is bullish for its forward prospects.

Comparing to my prior article in mid 2025 their properties grew from 7500 → 8,800 and rooms from 1.18m → 1.3m. Its rooms pipeline of 0.51m and 50% is under construction is a 20% capacity growth, that HLT reckon could drive a 25% rise in profitability.

What better barometer than a hotel operator to understand the thermometer of US prospects. The canary in the coal mine. This excerpt is particularly interesting in response to a question from an analyst:

“…..our largest market, the U.S., which is 75% of our business…. it is, I think, pretty hard to deny that over the next several years, we're not going to end up in a condition where we're going to have incremental economic growth. And a lot of that is going to be coming in the form, in my opinion, of the -- in the area that has the highest correlation to growth in room nights for hospitality, which is NRFI, nonresidential fixed investment. So you have a regulatory environment that is and going to continue to be much easier, tax environment where you have certainty corporate profits that remain quite strong and resilient, huge amounts of investments still to come in the core infrastructure that got done in the last administration, very little of which has still been spent that is going to continue to be a gift that keeps giving. On top of that, investment that's going on in terms of AI and related areas, data centers, energy around it and the reshoring not of everything that our population consumes but some of the critical elements. Again, the chips bill, that's just getting rolling. And there are other critical elements from a national defense point of view, where we are going to reshore some of these things. And all of those things require over the next 2, 3, 4, probably next 5-plus years, but I think it's hard to look 5 years over the next 2 or 3 years, huge amounts of activity and investment. What we have found, again, a very high R-squared for on a slight lag on nonresidential fixed investment. My belief is you're going to start. I mean whether it's in the fourth quarter, I don't know. I gave you the reasons why we feel better about the fourth quarter. And we've been pretty good at forecasting. So I'd say we feel pretty good about that. But as I think about '26, '27, '28, I think lifting up above all this crazy noise I actually -- I am an optimist self-declared, but I think there are legitimate reasons to feel really, really good about demand.”

#4 RBI - Restaurant Brands

This is a franchisor probably best known for its Burger King brand, and is rolling out a sandwich, chicken and coffee shop brand across the globe too.

The French appear to be the biggest fans manging their way through about twice as much per store as the Brits, the Germans, Spanish and….. Italians! Che sorpresa! So much for the Brits being one man out on fast food eating habits.

While Popeyes and Tim H are growing the fastest (up to 36% sales growth) it is (I think) incredible to see BK growing still at 8%. Saturated? Apparently not.

#5 Chipotle

A 3% drop in net earnings sent this lower by a one third YTD. The challenge appears to be cost of sale

#6 Howard Hughes HHC

PSH now own 46.9% and it hasn’t yet been taken private. 40% of the business is developing housing estates or “master planned communities”. It then develops high-rises or “Condo projects” for 30% and then mixed-use property management makes up the other 30%. A bit like playing Sim City, HHC sees developing amenities for affluent markets as a commercial opportunity that then drives demand for housing, and residents then drive the value of those commercial amenities that it owns. Growing and affluent places like Houston, Las Vegas and Phoenix where the affordability is superior and incomes are growing.

It boasts many awards for Best Selling MPC, Best City to Live In, Safest City, Best Planned Community.

Projects are also in places like Hawaii, this 3.5m Square foot village has shops, parks and a…. marina. Well why not, eh? Residents each get a parking space and a yacht berth.

HHH is cash flow positive but wasn’t net profit positive in 2Q25

To be Continued…

I will cover the remainder of the holdings in Part two of this article:

• Amazon

• Hertz

• Pershing Square SPARC Holdings

• Seaport Entertainment

• UBER

• Fannie Mae & Freddie Mac

• NIKE

• Brookfield Corporation

Conclusion

These seven holdings all offer strong cash generation and growth, both in the US and globally. Some challenges but the long-term picture remains strong.

I’m surprised PSH has grown to such a wide discount to NAV again, and that has partly to do with the simple fact that the NAV is growing far faster than the share price! I remain happy to hold.

Regards

The Oak Bloke

Disclaimers:

This is not advice - make your own investment decisions.

Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as "blue chip"