PS enters its August 13 earnings print in a notably different position than it occupied just six weeks ago — short sellers have been covering aggressively, borrow costs remain extreme, and the stock has surged 14% in a month.
The most striking shift is in short positioning. Shares sold short have fallen roughly 43% since mid-June, dropping from around 930,000 to fewer than 481,000. That is a significant capitulation by bears over a short window, and it has coincided directly with the stock's rally to $37.88. Yet the borrow market tells a more nuanced story: despite the covering, cost to borrow remains punishing at 151% annualised — down sharply from a peak above 253% in early July, but still among the most expensive borrows in the asset management universe. Availability has tightened to around 26%, meaning roughly one share remains in the lending pool for every three already borrowed. That combination — fewer shorts, still-expensive borrow — suggests the remaining short base is either highly convicted or structurally constrained from covering further. Options positioning leans defensively, with the put/call ratio at 1.71 against a 20-day average of 1.61, though the z-score of 0.64 indicates this is elevated but not extreme by recent standards.
The analyst debate centres on a core tension: does Pershing Square's persistent discount to net asset value represent a buying opportunity, or a structural ceiling? Bulls point to the proven long-term track record under founder Bill Ackman, a strong balance sheet, and the potential for new fund launches to drive fee growth. The consensus price target of $41.11 implies roughly 8.5% upside from current levels, with Citigroup maintaining a Buy rating (albeit having trimmed its target to $45 from $50 in mid-July) and Jones Trading initiating with a Buy at $39. Bears counter that the concentrated portfolio and dependence on key individuals creates binary risk, and that the NAV discount could persist or widen if fundraising disappoints — a concern Wells Fargo echoed when it cut its target to $34 while keeping an Equal-Weight rating. The valuation backdrop has shifted materially: the price-to-earnings multiple has expanded by more than 8 points over the past 30 days to nearly 50x, and the price-to-book has risen to 13.5x, compressing the margin of safety for new buyers.
One structural feature of PS worth noting is its ownership concentration. Pershing Square Capital Management itself holds 46% of shares, and Ackman personally holds a further 24%. That leaves a genuinely thin free float, which helps explain why short interest — though small in absolute share count — has historically been expensive to maintain and capable of generating sharp covering rallies. The most recent insider data (from April 30, now over 100 days old) shows Ackman purchased roughly 800,000 net shares at prices in the low-to-mid $20s, a position now sitting on a substantial paper gain following the stock's climb. At recent earnings, the stock fell 2% on the day following the June 22 print and nearly flat over five days — a muted reaction that suggests the market is not accustomed to large directional moves around PS results.
The August 13 print will test whether the fee and performance revenue line can justify a valuation that has re-rated sharply higher even as several analysts have been trimming targets — and whether the stock can sustain its premium at a moment when the short base has already largely capitulated.
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