So far, this year is proving to be a damp squib for the London stock market. Since 29 December 2023, the FTSE 100 is down 0.8%. Meanwhile, the US S&P 500 has leapt by 7.3% in 2024.
The Footsie flops
What’s more, this underperformance has gone on for years. Over half a decade, the Footsie is up by a mere 6.1%, while the main US index has soared by 81.3%. It’s a similar tale going back even further.
Of course, stock-market indices are a product of the returns of many — often hundreds of — member companies. And these returns can vary hugely from one listed business to another.
For example, take the returns (excluding cash dividends) for FTSE 100 firms over the last five years. These range from over 200% for the star performers to losses exceeding 57% for the dogs.
This one’s been a winner
As the stock-picker for my family portfolio, I identify and buy shares that I think will beat the wider market. Alas, I’m only human, so I sometimes pick dogs as well as stars.
Today, I’ll reveal one of my star stocks that has beaten all our other FTSE 100 and FTSE 250 holdings. This super-share is Pershing Square Holdings (LSE: PSH) — a little-known London-listed stock that’s nevertheless going great guns.
Established in 2012, Pershing is a Guernsey-based investment trust. This collective-investment fund invests in US-listed companies. The trust listed in London in May 2017 and has pretty much thrashed major stock markets ever since.
Over the past six months, Pershing shares have leapt by 27.1%, versus a 1.9% gain for the FTSE 100. Over one year, these figures are 40.2% and 1.6%, respectively. Over five years, the gap is even wider at 213.6% and 6.1%, respectively.
What’s the secret sauce?
Pershing invests in a fund of Pershing Square Capital Management, a leading US hedge fund run by star American investor William Ackman. And ‘Wild Bill’ is known for taking big, bold bets via a highly concentrated portfolio.
This approach has certainly worked out for Ackman himself, who has a net worth of $4.3bn. What’s more, while investing in hedge funds is usually only for the very wealthy, I can buy into Pershing for under £40 a share.
For the record, my wife and I bought Pershing shares for 2,989p a piece in August 2022. The stock went on to hit a 52-week high of 4,054p on 12 February. On Monday (11 March) it closed at 3,870p, which is 4.5% below this peak. Thus, we’re sitting on a paper profit of 29.5% in six months.
Finally, investing in hedge funds can be very risky. Some blow up spectacularly, while thousands more limp along before closing down. In addition, past performance is no guide to future returns. That said, I’m hoping that ‘Wild Bill’ continues to thrash the market for many years to come!
