Pershing Square (PS) Status update summary

Fannie Mae and Freddie Mac outlook

• High conviction remains on Fannie and Freddie as a top investment idea, with optimism for resolution before the end of the Trump administration due to strategic and political incentives.

• Resolution can be achieved by the president without congressional approval, potentially unlocking $500 billion to $1 trillion in value.

• The recommended approach is a phased release from conservatorship, starting with accounting for payments, exercising government warrants, and listing on a stock exchange, followed by ensuring adequate capitalization.

• Probability of no action before the end of the Trump administration is considered very low, with the process seen as a legacy-defining opportunity.

Investment strategy and portfolio updates

• Exited Hertz position due to loss of confidence in management after an unexpected equity offering, resulting in a small loss but avoiding further decline.

• Howard Hughes capital allocation focuses on acquiring full ownership of Vantage and deploying capital to insurance operations for higher ROE.

• PS Ventures will invest in high-growth, tech-forward private companies, with a long-term ownership approach post-IPO.

• Long-term orientation is emphasized, leveraging significant ownership and a strong management team to compound assets over time.

Key holdings and sector perspectives

• Amazon, Microsoft, and Meta are viewed as high-growth, well-managed businesses with strong future earnings potential; Meta is seen as undervalued due to concerns about spending.

• Netflix is considered a passive investment behind a strong management team, with its scale and IP providing a durable competitive advantage.

• S&P Global's franchise benchmarks and network effects are seen as resilient to AI disruption, with only a small portion of the business at risk.

• Intercontinental Exchange is highlighted for its 20-year record of earnings growth, durable business model, and strong management.