Bill Ackman’s Trump trade

In today’s newsletter:

• Bill Ackman’s big year continues

• Hedge funds squeezed by UK takeovers

• Paramount’s fate lies with Shari Redstone

Bill Ackman plans Pershing Square IPO

Six years ago, Bill Ackman was written off by many on Wall Street after a string of large investment losses and his failure to win shareholder backing for campaigns he ran against payrolls processor ADP and railroad Norfolk Southern.

But the tables have turned for the billionaire investor: he’s engineered a rebound in recent years and is cashing in.

On Monday, his hedge fund Pershing Square sold a 10 per cent stake to a group of investors for $1.05bn, valuing it at more than $10bn. The deal gives Pershing Square a lofty valuation compared to investment groups such as TPG and CVC that have gone public in recent years, notes the FT.

The stake sale’s a precursor to Ackman’s plan to take his firm public in 2025, a deal that would hand him a multibillion-dollar windfall if he can pull it off.

And the IPO push comes in a year when Ackman has made headlines again and again.

Since Hamas attacked Israel on October 7, he’s been a staunch supporter of Israel and attracted press coverage by calling for the ouster of the presidents of Harvard and the University of Pennsylvania after their responses to campus protests.

He’s also been an increasingly vocal critic of President Joe Biden on X. DD’s Antoine Gara reported last week that Ackman’s likely to announce his support for former president Donald Trump on the platform.

Behind the scenes, Ackman has been plotting a grand Wall Street plan.

The FT was first to report that Ackman is working to raise more than $20bn for a US-listed closed-end fund that mirrors a London and Amsterdam-listed Pershing vehicle that was the foundation of his comeback. He also won approval last year to use public vehicles, called Sparcs, to list private companies. Finally, he will soon disclose two new large investments.

It’s setting Ackman up to be one of Wall Street’s most visible players, especially if Trump is elected. Then there’s the big Trump trade in his portfolio.

Ackman’s a giant investor in Fannie Mae and Freddie Mac, two housing finance agencies nationalised during the 2008 crisis. Years ago, he sued the government to re-privatise the two agencies, but failed. During Trump’s presidency, his Treasury secretary Steven Mnuchin pushed forward part of the privatisation effort.

Ackman predicts Trump will revive the effort if elected.

“I would say the stock today is a proxy on the probability of president Trump being elected, and I think as that probability rises, so has the stock price,” he told shareholders at a recent Pershing Square gathering. Any revival of Mnuchin’s push would be “a meaningful value-creating event”, he added.

“I would expect that in the next Trump administration, if Trump is the president, either Mnuchin or a replacement Mnuchin will probably follow the same path,” he said.

‘Literally insane’: hedge funds feel the squeeze from UK takeovers

Hedge funds are learning the hard way to tread carefully when betting against UK stocks amid a surge in takeover interests.

A wave of takeover bids for UK-listed companies in recent weeks has burnt a bunch of hedge funds with short bets, DD’s Costas Mourselas reports.

Millennium Management, GLG and Gladstone Capital are among the group that have been caught with paper losses after stocks they had shorted soared from interested buyers.

The companies attracting that interest: fund supermarket Hargreaves Lansdown (rejected a bid from a group that included CVC), cyber security provider Darktrace (agreed to be bought by Thoma Bravo) and video game services company Keywords Studios (in discussions with EQT).

Their shares all jumped on reports of the interested buyers.

While all three of those groups have struggled recently, their cheap share prices have attracted the interest of foreign rivals and private equity buyers alike. Add in $1.2tn of “dry powder” to that mix, and you have a potential deal frenzy at hand.

That’s made it all the riskier to bet on UK stock price declines. “Shorting any UK mid-cap is insane, literally insane,” said one hedge fund executive who specialises in shorting stocks.

Part of the problem is that the scale of these UK companies is basically “peanuts” for any American group to scoop up, the executive added.

The data’s not working in the hedge funds’ favour, either. M&A activity for UK targets is up 84 per cent from a year ago, according to the London Stock Exchange Group.

“The UK public to private market is especially busy right now,” said Stefan Arnold-Soulby, partner at law firm Paul Weiss.

That’s good news for the long-starved London-based M&A lawyers and bankers advising on those deals. Bad news for the hedge funds shorting the takeover targets.

Inside the final hours of Paramount’s takeover saga

Time’s quickly running out. Shari Redstone, the media tycoon behind Paramount, needs to decide: do a deal with Skydance or walk.

By now, everybody’s exhausted by the melodrama surrounding the future of the storied Hollywood company, which has been on the block for more than six months.

And finally, there’s a clear offer that Redstone’s National Amusements — which controls about 80 per cent of the voting rights in Paramount despite holding just about 10 per cent — has to either approve or turn down.

Paramount’s special committee has recommended the sweetened offer by Skydance, the production group founded by billionaire David Ellison, DD’s James Fontanella-Khan and the FT’s Christopher Grimes and Anna Nicolaou report.

Ellison’s consortium, which includes US private equity backers RedBird and KKR as well as his father and Oracle founder Larry Ellison, are planning to give more cash to regular shareholders — aka everybody else but National Amusements.

DD’s learned a few other key details: Skydance has offered to buy National Amusements for a little over $2bn, which will give it control of Paramount, and will offer to buy up to half of regular shareholders’ stock at about $15 per share — that’s worth about $4.5bn.

On top of that, Skydance and RedBird would inject an extra $1.5bn to reduce the media giant’s debt load. As part of the transaction, Skydance — which would be valued at about $4.8bn as part of the deal — would merge with Paramount.

Technically, there’s still a competing bid from the Apollo and Sony duo, but it seems to have fizzled out. That leaves Skydance’s offer.

While everybody expects a decision by Tuesday at Paramount’s annual shareholder meeting, DD’s sources said that’s unlikely. Instead, the special committee’s expected to make its public recommendation by then.

At this point, the choice is in Shari’s hands. She’s always been pro-Ellison — billionaire kids seeming to have a thing for each other. And while she’s gotten cold feet in recent weeks, it hasn’t been on the merits of the deal.

What’s at stake here is pure emotions: selling means the end of an era. She would be ceding the company her dad built, a man who humiliated her for most of her life but who she still loved deeply.

Be ready for a plot twist worthy of the best Hollywood dramas.

Job moves

• JPMorgan’s global head of payments Takis Georgakopoulos has left the bank, with Max Neukirchen and Umar Farooq set to replace him as co-heads effective immediately.

• The UK’s Payments Systems Regulator’s managing director Chris Hemsley will leave “imminently” as the watchdog faces growing criticism over proposed fraud rules. He will join Fingleton as a director this autumn.

• Coller Capital has hired Boris Maeder to lead the international expansion of the firm’s private wealth secondaries solutions and to head its new Zurich office. His role will be managing director and head of international private wealth distribution. He joins from UBS Wealth Management.

• Paul Weiss has hired Christopher Wilson as a litigation partner in Washington DC. He most recently worked for Gibson Dunn.

• Skadden has promoted 32 attorneys to counsel. The firm has also hired Andrea Griswold as a partner in its white-collar defence and investigations group. She is the outgoing deputy US attorney for the Southern District of New York.

Smart reads

AI empire Sam Altman’s opaque investments in start-ups have made him a billionaire, the Wall Street Journal reports. They also raise concerns about potential conflicts of interest.

Shale frenzy Consolidation among US oil and gas companies has reached a fever pitch, with much of the best acreage spoken for, the FT writes. So companies are looking further afield.

Judicial oblivion A group of attorneys and judges helped propel Judge David Jones to the helm of one of the busiest bankruptcy courts in the US, Business Insider investigates. How did they not foresee his spectacular fall?

News round-up

NYSE halts trading in Berkshire Hathaway and other stocks after glitch (FT)

E*Trade considers kicking meme-stock leader Keith Gill off platform (WSJ)

StanChart’s Iran transactions subject of fresh whistleblower claims (FT)

Blackstone sweetens Hipgnosis offer as part of revised bid for music rights owner (FT)

Can Czech billionaire Daniel Křetínský get Royal Mail to deliver? (FT)

Investors revive enthusiasm for European tech start-ups (FT)

How Universal plans to build one of the world’s best theme parks in UK (FT)