PSH-ing up Part Two
Review of OB25 for 25 idea Pershing Square
Dear reader
We PSH on to the final 8 holdings in this the part two of the article.
#8 Amazon
A very strong 2Q25 result from Amazon.
Amazon’s AI advancements are a key driver of its future growth potential.
The company has integrated AI across its operations, with tools like Alexa+ (expanded to millions of customers), DeepFleet (optimising paths for over 1 million robots, improving efficiency in Amazon warhouses by 10%), combined with AI-enhanced inventory management (20% improved demand forecasting accuracy) are driving further efficiencies its rivals cannot easily match.
We know Amazon for its retail shop and perhaps its AWS hosting. But what about software?
AWS’s AI offerings, including Bedrock AgentCore, Strands Agents, and new foundation models like Anthropic’s Claude 4, enable scalable, secure AI solutions for enterprise clients like PepsiCo and Airbnb. Innovations such as Amazon S3 Vectors (reducing vector storage costs by up to 90%) and AWS Transform (accelerating mainframe modernization) position AWS as a leader in AI infrastructure. Multi-billion-dollar investments in cloud and AI infrastructure in regions like Saudi Arabia and Australia further signal Amazon’s commitment to global AI leadership. Kiro (an agentic IDE transforming software development) is enhancing customer experiences and operational productivity. Ecommerce tools like “Hear the Highlights” and “Enhance My Listing,” underscore Amazon’s ability to drive revenue growth and operational efficiency, making it a high-potential holding for Pershing Square Holdings.
#9 Hertz
PSH own 19.8% of Hertz according to Ackman on X. It bought at $3-$4 a share vs an $20 per share historical level. Today it is $5.56 a share.
A massive gamble on buying a fleet of Teslas did not work well for Hertz.
Ackman cited several reasons for his Hertz investment, including tariffs on US motor vee-hear-culls will likely cause used car values to rise.
Essentially the drivers of profitability is utilisation and depreciation. So DPU is depreciation per unit per month while all other direct operating expenses (DOE) are measured per transaction day.
We see a good level of improvement in the 2Q25 results as various initiatives take effect. Altough there is more work to do to actually deliver decent profits to the bottom line.
#10 Seaport Entertainment
Central Park? Coney Island? Faggedaboudi’! Pier 17 is *THE* place to be. Kind of like the “O2” arena but way more exclusive. This is one of the assets under management from this Howard Hughes spin out company. There are resaurants, housing, retail, so Seaport’s NY assets are kind of like the O2 and a few square blocks of Covent Garden rolled into one.
It then owns a baseball team in Las Vegas and a Stadium valued at $132m with a 10k person capacity. Plus an 80% share of 1.8m sq.ft of the Las Vegas Strip.
PSH own 40% of Seaport.
#11 UBER
Uber’s 2Q25 delivered highly profitable growth (operating profit up 82% yoy), with record customer numbers and frequency of use. Uber’s platform strategy for customer acquisition and engagement is habit forming.
Consumers who use both Mobility and Delivery services have 35% higher retention and generate 3x the gross bookings and profits compared to single-service users.
Uber Rides and Uber Eats were combined to a single app and this provides the perfect cross sell of services. Getting a ride? Want a coffee en route? We can arrange that for you. Wait, you don’t drink coffee do you? How about a mug of that Mocha chocolata ya ya creole you keep singing for instead? AI models are generating personalised and targeted promotions.
The Uber One membership program is experiencing rapid growth, with over 36m members. Members spend 3x more than non-members and generate over 40% of the combined Delivery and Mobility Gross Bookings.
Uber is also deploying larger, more sophisticated AI models to drive personalised, targeted cross-platform promotions, such as suggesting coffee on the way to work, which improves efficiency and engagement.
Are autonomous vehicles (AVs) Uber’s biggest existential risk? Or opportunity? Uber is actively leading AV commercialisation partnering with 20 AV companies across Mobility, Delivery, and Freight. New collaborations with Baidu, Lucid, and Nuro were announced this quarter, while Waymo deployments in Austin and Atlanta are outperforming 99% of drivers in daily trip counts.
Uber plans to expand OEM partnerships, recognising that while AV software advances quickly, hardware platforms must be built at scale and at lower cost.
Uber positions itself as central to the real-world AI revolution thanks to its unmatched ride-hail dataset, billions of trips across 70 countries, critical for training advanced AV systems. The company is exploring ways to externalise these technical capabilities to help partners.
Uber anticipates three main AV business models on its platform:
Merchant model: Uber pays a predictable fee per trip or day to a partner, taking on the risk of successfully utilising that asset. For example you lend Uber your AV after it drops you to work until say 4pm so that it gets charged again ready for your return trip from work.
Agency model: Revenue share, similar to the current driver-partner structure where it splits the revenue with the AV owner.
Ownership model: Uber or a financing partner owns the vehicles and licences Uber’s platform per month or per mile.
#12 Fannie Mae & Freddie Mac (FNMA and FMCC)
Yesterday brought news that Trump is planning an IPO of FNMA and FMCC.
What does PSH get out of an IPO?
The capitalisation of FNMA by end of 2025 would be $116bn where legacy shareholders own 18% so $20.9bn. Today the market cap is $11.3m (nearly double the $6.65bn marcap of my prior article) implying 1.8X upside.
The capitalisation of FMCC by the time it IPOs could be $99bn where legacy shareholders own 16% so $15.8bn. Today, the market cap is $5.1bn (up 50% from the 3.4bn at my prior article 6 months ago) implying a 3X upside.
This source claims PSH owns 10% of the GSEs. If that were true 10% of $36.7bn by 2027 would be $3.67bn. That implies the upside is far far larger, if it’s true!
A reader kindly provided some further context as to the potential upside:
Based on the updated data provided as of August 5, 2025, and incorporating the most recent information from web searches and other sources (including no significant changes to the privatisation valuation scenarios since May 2025, though reports indicate potential acceleration of the IPO timeline to late 2025), I've recalculated the estimated impact on Pershing Square Holdings' (PSH) NAV per share if Fannie Mae and Freddie Mac are spun off.
The calculations follow the same methodology as the initial May analysis but use the new share prices for Fannie Mae ($9.985) and Freddie Mac ($7.97), updated market caps, and the latest PSH shares outstanding figure.
Updated Calculations for FNMA and FMCC
- **Current Market Caps** (using ~740 million shares outstanding for Fannie Mae and ~650 million for Freddie Mac, consistent with the initial derivation from price and reported combined value):
- Fannie Mae: 740 million shares × $9.985 = **$7.39 billion**.
- Freddie Mac: 650 million shares × $7.97 = **$5.18 billion**.
- Combined: **$12.57 billion**.
- **PSH's Current Holdings Value** (using effective post-dilution ownership of 2% for Fannie Mae and 1.95% for Freddie Mac):
- Fannie Mae: 2% × $7.39 billion = **$0.148 billion**.
- Freddie Mac: 1.95% × $5.18 billion = **$0.101 billion**.
- Total: **$0.249 billion**.
- **PSH Shares Outstanding**: 178,903,590 (updated from recent reports as of August 2025; this is the number of public shares used for NAV per share calculations).
- **Total Current NAV**: $79.68 × 178,903,590 ≈ **$14.255 billion**.
#### Conservative Scenario ($34 per share post-spin-off for both Fannie Mae and Freddie Mac, per Ackman's estimate)
- Post-Spin-Off Market Caps:
- Fannie Mae: 740 million shares × $34 = **$25.16 billion**.
- Freddie Mac: 650 million shares × $34 = **$22.10 billion**.
- PSH's Post-Spin-Off Holdings Value:
- Fannie Mae: 2% × $25.16 billion = **$0.503 billion**.
- Freddie Mac: 1.95% × $22.10 billion = **$0.431 billion**.
- Total: **$0.934 billion**.
- Gain: $0.934 billion - $0.249 billion = **$0.685 billion**.
- Increase in NAV per Share: $0.685 billion ÷ 178,903,590 shares ≈ **$3.83** (or ~£2.88 per PSH share at the implied exchange rate of ~1.33 USD/GBP derived from the provided NAV figures).
- Percentage Increase in NAV: ($0.685 billion ÷ $14.255 billion) × 100% ≈ **4.8%**.
#### Optimistic Scenario ($347 billion combined post-spin-off valuation, split ~58.8%/41.2% between Fannie Mae and Freddie Mac based on updated market cap proportions)
- Post-Spin-Off Market Caps:
- Fannie Mae: 58.8% × $347 billion = **$204 billion**.
- Freddie Mac: 41.2% × $347 billion = **$143 billion**.
- PSH's Post-Spin-Off Holdings Value:
- Fannie Mae: 2% × $204 billion = **$4.08 billion**.
- Freddie Mac: 1.95% × $143 billion = **$2.79 billion**.
- Total: **$6.87 billion**.
- Gain: $6.87 billion - $0.249 billion = **$6.62 billion**.
- Increase in NAV per Share: $6.62 billion ÷ 178,903,590 shares ≈ **$37.01** (or ~£27.84 increase per PSH share at the implied exchange rate of ~1.33 USD/GBP).
- Percentage Increase in NAV: ($6.62 billion ÷ $14.255 billion) × 100% ≈ **46.5%**.
### Assumptions Used
#### Initial Assumptions (from May 2025 Analysis)
- PSH's holdings represent ~10% of the publicly traded OTC shares in Fannie Mae and ~9.77% in Freddie Mac, equating to an effective post-dilution ownership of ~2% in Fannie Mae and ~1.95% in Freddie Mac after accounting for the U.S. Treasury's warrants for ~80% of common stock.
- Shares outstanding for valuation purposes: ~740 million for Fannie Mae and ~650 million for Freddie Mac (derived from the reported combined market value of ~$12.3 billion and share prices at the time to ensure consistency with the Reuters article).
- Current market caps based on May prices ($9.94 for Fannie Mae, $7.15 for Freddie Mac), with a ~60/40 split for the optimistic scenario.
- Privatization scenarios: Conservative based on Ackman's estimate of ~$34 per share post-IPO (implying a revaluation of current shares); Optimistic based on a $347 billion combined full company valuation at a P/E of 12x 2024 net income (per Thorne's analysis on X).
- PSH shares outstanding: Assumed ~200 million.
- The spin-off leads to the projected valuations without further dilution beyond the existing warrants, no significant recapitalization costs impacting common shareholders, and no major regulatory or market risks materializing (e.g., credit downgrades or higher mortgage rates).
- PSH's total NAV calculated using the provided NAV per share ($77.44 USD / £57.84 GBP at the time).
- Holdings data based on historical 13F filings and Ackman's public statements (no changes assumed since last reported in 2014: 115,569,796 shares of Fannie Mae and 63,503,717 shares of Freddie Mac).
#### Current Assumptions (Updated for August 2025)
- Same holdings percentages and effective ownership as initial (confirmed via historical data and Ackman's ongoing public affirmations; recent 13F filings do not list FNMA/FMCC, likely due to reporting structure, but no evidence of sales).
- Same shares outstanding for Fannie Mae and Freddie Mac as initial for consistency.
- Updated current market caps using August prices ($9.985 for Fannie Mae, $7.97 for Freddie Mac).
- Updated split for optimistic scenario to ~58.8%/41.2% (Fannie Mae/Freddie Mac) based on the new market cap proportions.
- Privatisation scenarios unchanged: Conservative remains at ~$34 per share (reaffirmed in recent Ackman statements and presentations from January 2025); Optimistic remains at $347 billion combined (no new contradictory estimates found, though some sources mention potential 10x upside from late-2024 prices, which aligns roughly with the $34 target given price gains since then).
- PSH shares outstanding updated to 178,903,590 (per recent buyback announcements and reports as of August 2025).
- PSH's total NAV calculated using the provided NAV per share ($79.68 USD / £59.92 GBP).
- The spin-off would still lead to the projected valuations, but with potential for earlier timing (late 2025 per recent reports on Trump's plans, possibly raising ~$30 billion for the government), without additional dilution or costs beyond warrants. Risks (e.g., higher mortgage rates or delays) remain, and no other products or events from xAI impact this.
- All estimates are speculative and assume favorable political and market conditions; actual outcomes could vary significantly.
#13 NIKE
From a recent $54/share low Nike is now at $74.19/share placing it at a £81.5bn marcap.
FY25 revenues were $46.3bn down -10%, or -9% on a constant-currency basis.
Nike is perhaps the poster child of self-inflicted disaster in the 2020s. A shift to Woke marketing “You can’t win, so win”, encouraging people to “defy stereotypes” by encouraging the stereotype of defiance. By playing to perceived victimisation of one audience by actively victimising another. Adverts with obese runners to show it is inclusive. Trans humanoids beating women in sports to dispel the notion that there is even any such concept of gender. The backlash has left Nike looking out of touch.
To compound that, tariff uncertainty has hit Nike hard, whose raw materials and manufacturing are mostly focused in the Asian region. (Such as Zotefoam in Vietnam)
Consumer confidence remains strong in many markets despite a challenging economic environment, and Nike is up 40% from its recent lows. Why is that?
A refocus onto its Nike, Jordan and Converse brands through a sharp focus on sport, alongside product innovation and differentiating each brand by sport too. NKE is also focusing on reshoring and altering supply chains in response to Tariffs so to improve margins.
#14 Brookfield Corporation
BN operates in the areas of Private Equity, Wealth Management, Infrastructure, Renewables, Insurance and Asset Management. Its balance sheet is geared through a structure of borrowings ($322bn) and non-controlling interests ($122.5bn) and Preference Shares meaning ordinary equity (including PSH’s 10% holding) of $40bn gets magnified.
But the non-controlling interests reduce the distributable earnings and FCF by about 80% so ~$1bn is over 1.5bn shares about 67 cents (on a $60 share). FCF is actually ~$9bn for ordinary holders… $6 per share.
By continuing to grow the business, forecast 2028 earnings will be double that of today.
But if the business ploughs cash back in for further growth then earnings will be 2.6X today.
Conclusion
These final eight holdings add to the first seven and make up a focused portfolio for PSH-ers at a substantial discount.
While some holdings like Nike and Hertz have been bought with a view to turnaround, all offer growth in 2025 and beyond.
To evidence that consider the simple fact that PSH has galloped ahead of the S&P 500 by taking a
Even comparing it against Berkshire Hathaway PSH comes in 2nd place but only just. They mainly move neck and neck. If you compare by NAV growth then PSH actually beats it.
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! There is an outsize potential upside from FNMA and FMCC, and a few turnaround stories alongside cash generative businesses with growth runways.
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"
I'm pretty sure they've sold out of Canadian Pacific Kansas based upon their investor presentation a few months ago. Using Grok, I asked it to estimate the potential boost to the NAV of PSH if Fannie Mae and Freddie Mac were floated, and it came up with roughly a 5% boost to NAV.