Q2 2026 Pershing Square Inc Earnings Call - Q&A

Speaker #1: To sell or a solicitation of an offer to purchase, any interest or security in PERSHING SQUARE INC., or any PERSHING SQUARE FUND, or securities of any other person or investment advice, or an invitation or inducement to deal in securities.

Speaker #1: I guess we're just going to have a conversation. But we welcome your questions. We'll take them in the order in which it's— in which they're received.

Speaker #1: So let's see if I can do this. Okay, James Kiernan. Please unmute your line, and we'd be delighted to take your question. Okay, James, you have to unmute.

Speaker #1: Okay, we're going to take the next person. Let's try Lumi Casanova. You have to unmute your mic. Hi, we can hear you now.

Speaker #2: Oh, hi, Bill. I've got a quick question. And thank you again for taking questions in spaces that's unprecedented, I think it's leading the way.

Speaker #2: It should be how every business does their disclosures, in my opinion. But onto my question: indirectly, PERSHING SQUARE owns quite a large stake in U.S.

Speaker #2: fintech, which currently has 16 trillion dollars under management. Do you think that will ever materially affect the balance sheet of PERSHING SQUARE, and how would you unlock that potential?

Speaker #1: I'm not sure I understand your question, to be honest. Could you be a little more explicit?

Speaker #2: Yeah, no, so through F2, Fanny and Freddie, you own 210% stakes in the Commons, which owns 50% in U.S. fintech. And U.S. fintech is kind of one of the most unknown companies but it's huge.

Speaker #2: It manages 16 trillion dollars. And I believe there's a lot of potential unlocked value for PERSHING SQUARE shareholders, which I am a shareholder. Potentially.

Speaker #2: And I was wondering, if you were thinking about that, but yeah, never know.

Speaker #1: Yeah, I'm not sure exactly what you're referring to. I know Fanny and Freddie have some joint securitization and other sort of assets. We have not assigned any incremental value to them beyond the core value of the two kind of franchise companies.

Speaker #1: But they're obviously very uniquely positioned businesses. They've been effectively stewards of the government for the last 15 or more years. And in one of the benefits, of course, for them to kind of become public companies again, go back to kind of private enterprise, the ability to recruit talent, the ability— I mean, they have among the greatest data sets of any company in the world.

Speaker #1: There's a ton of unmonetized— I'm sure— assets and I think Director Polti has been trying to take some steps in that direction in making the enterprises more efficient.

Speaker #1: But we think they're amazing companies. Incredibly strong market position. And it's time for them not to be wards of the state certainly with you there.

Speaker #1: But thanks so much for your question. And let's go to the Marsh Centurion. Feel free to ask your question. But you have to turn off your mic.

Speaker #1: Turn on your mic. Go ahead, Mars Centurion. We're going to go with—

Speaker #2: Okay, oh, there we go. Can you hear me?

Speaker #1: Yes, we can now.

Speaker #2: Great, sorry. So just a question. On PSUS, and a follow-up on Howard Hughes, if you've got the time. So regards— related to two investment theses, Fanny and Freddie, they're probably a few questions on that today.

Speaker #2: You started off the year mentioning it was one of your— or maybe your best idea for 2026. And how should we think about it, kind of looking at the PSUS sizing?

Speaker #2: How should we think about maybe your current conviction on Fanny and Freddie and any progress you have on that? And also, if you could give us an update on Hertz and your previous thesis on that.

Speaker #1: Sure. So I'll take F2, and Ryan, why don't you handle Hertz? So our views on Fanny and Freddie really have not changed. From an investment perspective, what's interesting about these companies is they're sort of perpetual options on an outcome that we think is a likely outcome.

Speaker #1: We think it's— we think, and we believe the president and Republicans generally believe it's critically important that these entities leave conservatorship before the end of the Trump administration.

Speaker #1: And the reason for that is, in the event that someday Democrats control the executive branch, and in an AOC presidency, the concern would be you wouldn't want Fanny and Freddie and the cash they generate to be expropriated in the way that that cash was expropriated during the Obama administration, and used for purposes without congressional oversight.

Speaker #1: And I think that's one, I would say, important strategic reason for this to be resolved and be resolved in the administration. And then the president himself has been very forward-leaning, saying that he wants to, quote-unquote, "take these companies public again," that there's a trillion dollars of value to be unlocked for the American people.

Speaker #1: And I can't imagine the president not wanting to unlock a trillion dollars of value for the American people. So it's definitely something that I believe will remain a high priority.

Speaker #1: We've had multiple meetings with the administration from the president on down, all the relevant participants. And we remain optimistic that this gets resolved. Now, obviously, a lot of things on the president's plate, there's a war in Iran, midterms coming up, and various other things.

Speaker #1: But what's interesting is, whatever way the country tips on midterms, what's interesting about a resolution of Fanny and Freddie is the entire resolution can be resolved by the president without going to the Congress.

Speaker #1: And so it's a— whether you think of it as a $500 billion deal, or a trillion dollar deal, it's an important thing the president can do with or without the Congress, before or after midterms.

Speaker #1: So we like it. We own it. And we have very constructive on the outcome here.

Speaker #2: And then in regards to the Hertz question, we fully exited our position in Hertz, which was relatively small to begin with. After they announced an equity offering that we did not think was necessary, we found pretty surprising.

Speaker #2: And frankly, it was a very bungled equity offering. It's unlike anything we had really seen a company do before. It was very surprising to us that they decided to issue equity for the amount and in the manner that they did, because they had previously just reported results that were quite good for the first quarter.

Speaker #2: They had a very strong level of liquidity. And then when they actually released their results last week for the second quarter, they again showed pretty good results, strong levels of liquidity.

Speaker #2: So it was never really clear to us why they needed to issue equity. And so we kind of effectively lost confidence in management. And so we decided to exit our position.

Speaker #1: Invitation or inducement to deal in securities. I guess we're just going to have a conversation. But we welcome your questions. We'll take them in the order in which it's— in which they're received.

Bill Ackman: Invitation or inducement to deal in securities. I guess we're just going to have a conversation. But we welcome your questions. We'll take them in the order in which they're received. So let's see if I can do this. James Kiernan, please unmute your line, and we'd be delighted to take your question. James, you have to unmute. We're going to take the next person. Let's try Lumi Casanova. You have to unmute your mic.

Speaker #2: Now, to go back to your question about sort of the initial thesis and how we think about it, which I think is instructive, ultimately Hertz was very different from the typical investment.

Speaker #1: So let's see if I can do this. Okay, James Kiernan. Please unmute your line, and we'd be delighted to take your question. Okay, James, you have to unmute.

Speaker #2: Normally we are a relatively concentrated investor, focusing on simple, predictable free cash flow generative businesses. Every now and then, we will make an investment that we believe has sort of the characteristics economically of an asymmetric sort of not a hedge per se, but asymmetric outcome.

Speaker #2: And so we will allocate a very small percentage of our capital, and the Hertz's case, it was generally something before we sold around 2% in the 2 to 3% range, depending upon the day.

Speaker #1: Okay, we're going to take the next person. Let's try Lumi Capsanovae. You have to unmute your mic. Hi, we can hear you now.

Speaker #2: And we will do that when we believe there is the opportunity to make 5 or 10 times our money in a business that otherwise would not meet our quality standards.

Speaker #2: And so Hertz was something that was a very levered business, had gone through bankruptcy, gone through multiple management teams, and was at what we believed a very depressed price when we bought it.

Lumi Casanova: Hello?

Bill Ackman: Hi, we can hear you now.

Speaker #2: And we knew that there was some risk inherent in it. And whenever a business is highly leveraged, even relatively small negative surprises can have a very big impact on the share price.

Speaker #2: Oh, hi, Bill. I've got a quick question. And thank you again for taking questions in spaces that are unprecedented, I think it's leading the way.

Lumi Casanova: Oh, hi, Bill. I've got a quick question, and thank you again for taking questions on Spaces. That's unprecedented. I think it's leading the way. This should be how every business does their disclosures, in my opinion. But onto my question. Indirectly, Pershing Square owns quite a large stake in US Syntech, which currently has $16 trillion under management. Do you think that will ever materially affect the balance sheet of Pershing Square, and how would you unlock that potential?

Speaker #2: It should be how every business does their disclosures, in my opinion. But onto my question: indirectly, PERSHING SQUARE owns quite a large stake in U.S.

Speaker #2: And so recognizing that, but also the potential for significant share price appreciation of 5 to 10x, we decided that we would invest a very small amount of our capital, with the potential to make a huge investment return if the facts played out in a very— a way that we thought was very reasonable.

Speaker #2: Fintech, which currently has $16 trillion under management—do you think that will ever materially affect the balance sheet of Pershing Square, and how would you unlock that potential?

Speaker #2: And while Hertz was on a very good track initially, this equity offering caused us to reassess our views. And with asymmetric investments, like Hertz, even though they're relatively small, once they sort of go off track in the thesis, we lose some confidence in management.

Speaker #1: I'm not sure I understand your question, to be honest. Could you be a little more explicit?

Bill Ackman: I'm not sure if I understand your question, to be honest. Could you be a little more explicit?

Speaker #2: We ultimately reduced the likelihood of the potential outcomes that we think got us into the investment in the first place. And we just decided to sell and move on.

Speaker #2: Yeah, no, so through F2, Fanny and Freddie, you own 210% stakes in the Commons, which owns 50% in U.S. fintech. And U.S. fintech is kind of one of the most unknown companies but it's huge.

Lumi Casanova: Yeah. No, so through F2, Fannie and Freddie, you own two 10% stakes in the Commons, which owns 50% in US Syntech. US Syntech is kind of one of the most unknown companies, but it is huge. It manages $16 trillion. I believe there is a lot of potential unlocked value for Pershing Square shareholders, which I am a shareholder, potentially. I was wondering if you were thinking about that, but never know.

Speaker #2: So we had effectively, for the funds that we manage, a very small, kind of almost immaterial loss on the position overall, for the funds, although it was, I think, roughly a 30-ish percent type loss on the position itself.

Speaker #2: It manages 16 trillion dollars. And I believe there's a lot of potential unlocked value for PERSHING SQUARE shareholders, which I am a shareholder. Potentially.

Speaker #2: Fortunately, we sold the investment very quickly. And we actually avoided a lot of the significant decline I think the shares ultimately went down 60% or so to the bottom, but we had exited before that it came in large part.

Speaker #2: And I was wondering, if you were thinking about that, but yeah, never know.

Speaker #1: Yeah, I'm not sure exactly what you're referring to. I know Fanny and Freddie have some joint securitization and other sort of assets. We have not assigned any incremental value to them beyond the core value of the two kind of franchise companies.

Bill Ackman: Yeah. I am not sure exactly what you are referring to. I know Fannie and Freddie have some joint securitization and other sort of assets. We have not assigned any incremental value to them beyond the core value of the two kind of franchise companies. They are obviously very uniquely positioned businesses. They have been effectively stewards of the government for the last 15 or more years. One of the benefits, of course, for them to kind of become public companies again and go back to kind of private enterprise, the ability to recruit talent. They have among the greatest data sets of any company in the world. There is a ton of unmonetized, I am sure, assets. I think Director Pulte has been trying to take some steps in that direction in making the enterprises more efficient.

Speaker #2: And so we think sized this one appropriately, given the relative range of outcomes that could happen. But we have exited the position.

Speaker #1: Yeah, just to give you a little more granular on that, we— one of our thoughts here is that we could be helpful to the company in helping manage the balance sheet risk.

Speaker #1: And to that end, we help the company execute a convert, on very attractive terms, with minimal dilution to the company that our understanding with management is that was going to fulfill their equity needs and their capital needs going forward.

Speaker #1: But they're obviously very uniquely positioned businesses. They've been, effectively, stewards for the government for the last 15 or more years. And one of the benefits, of course, for them to kind of become public companies again, go back to private enterprise—the ability to recruit talent, the ability— I mean, they have among the greatest data sets of any company in the world.

Speaker #1: And then we were, frankly, shocked when we— they did this literally overnight equity offering on terrible terms and just the way it was executed was about the worst execution of an equity raise we've seen in history.

Speaker #1: There are a ton of unmonetized—I'm sure—assets, and I think Director Pulte has been trying to take some steps in that direction, in making the enterprises more efficient.

Speaker #1: There was no— it just made no sense to us. So we actually— I like the CEO. I think that the operating team is good.

Speaker #1: But we think they're amazing companies. Incredibly strong market position. And it's time for them not to be wards of the state. So certainly with you there.

Bill Ackman: But we think they are amazing companies, incredibly strong market position, and it is time for them not to be wards of the state. So certainly with you there. But thanks so much for your question. Let us go to the Marsh Centurion. Feel free to ask your question. But you have to turn off your mic and turn on your mic. Go ahead, Marsh Centurion. We are going to go with-

Speaker #1: I just don't understand the sponsor here and how they're managing or maybe the CFO. I don't know who's the ultimately responsible party here. But it just made no— it makes no sense.

Speaker #1: But thanks so much for your question. And let's go to the Marsh Centurion. Feel free to ask your question. But you have to turn off your mic.

Speaker #1: It could still work from here. But when you own a highly levered enterprise, you want to have a lot of confidence in the capital allocation skills of the— and financing skills of the team running the company.

Speaker #1: Turn on your mic. Go ahead, Mars Centurion. We're going to go with—

Speaker #2: Oh, okay. Oh, there we go. Can you hear me?

[Shareholder 1]: Okay. Oh, there we go. Can you hear me?

Speaker #1: So there you go. Thanks for your question.

Speaker #1: Yes, we can now.

Bill Ackman: Yes, we can now.

[Shareholder 1]: Great. Sorry. Just a question on PSUS and a follow-up on Howard Hughes if you have got the time. Related to two investment theses on Fannie and Freddie, there will probably be a few questions on that today. You started off the year mentioning it was one of your, or maybe your best idea for 2026. How should we think about it kind of looking at the PSUS sizing, how should we think about maybe your current conviction on Fannie and Freddie, and any progress you have on that? Also, if you could give us an update on Hertz and your previous thesis on that.

Speaker #2: Great. Sorry. So just a question. On PSUS, and a follow-up on Howard Hughes, if you've got the time. So regards— related to two investment theses, Fanny and Freddie, they're probably a few questions on that today.

Speaker #2: Makes sense. Makes sense. If I may, how would you follow up?

Speaker #1: Quick, because I want to give other people a chance. Go ahead.

Speaker #2: Of course. Of course. So I understand your previous call. Please just correct my understanding. But if— do I understand correctly, you're intending to monetize some of the real estate exposure in Howard Hughes via third-party capital and then redeploy that?

Speaker #2: You started off the year mentioning it was one of your—or maybe your—best ideas for 2026. And how should we think about it, kind of looking at the PSUS sizing?

Speaker #2: How should we think about, maybe, your current conviction on Fannie and Freddie, and any progress you have on that? Also, if you could give us an update on Hertz and your previous thesis on that.

Speaker #2: And just into primarily into the insurance side of things. Just curious if you could give us a little color on how you see allocating that capital?

Speaker #2: Are you still considering other acquisitions of private companies, or is it primarily going to be going— how would it be allocated exactly?

Speaker #1: Sure. So I'll take F2, and Ryan, once you handle Hertz. So, our views on Fannie and Freddie really have not changed. From an investment perspective, what's interesting about these companies is they're sort of perpetual options on an outcome that we think is a likely outcome.

Bill Ackman: Sure. I will take F2 and Ryan, why don't you handle Hertz? Our views on Fannie and Freddie really have not changed. From an investment perspective, what is interesting about these companies is they are sort of perpetual options on an outcome that we think is a likely outcome. We think and we believe the president and Republicans generally believe it is critically important that these entities leave conservatorship before the end of the Trump administration. The reason for that is, in the event someday Democrats control the executive branch in an AOC presidency, the concern would be you would not want Fannie and Freddie and the cash they generate to be expropriated in the way that that cash was expropriated during the Obama administration and used for purposes without congressional oversight. I think that is one, I would say, important strategic reason for this to be resolved in the administration.

Speaker #1: Sure.

Speaker #2: In the insurance space, yeah.

Speaker #1: So right now, we've advanced a billion dollars of— we've purchased a billion dollars of Howard Hughes Preferred to facilitate Howard Hughes' acquisition advantage. The result is that today, Howard Hughes only owns 50% of the economics of the Vantage business.

Speaker #1: We think it's— we think, and we believe the President and Republicans generally believe, it's critically important that these entities leave conservatorship before the end of the Trump administration.

Speaker #1: So first priority is for Howard Hughes to own 100% of Vantage. So the first billion or so we raise will go to buyout Pershing Square's interest in— or economic interest in Vantage.

Speaker #1: And the reason for that is, in the event—someday—Democrats control the executive branch, and in an AOC presidency, the concern would be you wouldn't want Fannie and Freddie and the cash they generate to be expropriated in the way that that cash was expropriated during the Obama administration and used for purposes without congressional oversight.

Speaker #1: And then incremental capital will go to write sort of additional business. So imagine a world in which we found a way to create a billion and a half of monetization.

Speaker #1: And the real estate's subsidiary figured a billion of that would go to repay the Preferred, which would give Howard Hughes 100% of the insurance operation.

Speaker #1: And I think that's one, I would say, important, strategic reason for this to be resolved and be resolved in the administration. And then the president himself has been very forward-leaning, saying that he wants to, quote-unquote, "take these companies public again," that there's a trillion dollars of value to be unlocked.

Speaker #1: And then 500 billion would go into the capital of the insurer, which would give it the flexibility to write more business. I think the easiest way to think about it.

Bill Ackman: The president himself has been very forward-leaning in saying that he wants to quote unquote, "Take these companies public again," that there is a USD 1 trillion of value to be unlocked for the American people. I cannot imagine the president not wanting to unlock USD 1 trillion of value for the American people. So it is definitely something that I believe will remain a high priority. We have had multiple meetings with the administration, from the president on down, all the relevant participants, and we remain optimistic that this gets resolved. Now, obviously, a lot of things on the president's plate. There is a war in Iran, midterms coming up, and various other things. What is interesting is whatever way the country tips on midterms, what is interesting about a resolution of Fannie and Freddie is the entire resolution can be resolved by the president without going to the Congress.

Speaker #1: And then over time, as we generate more cash, we would sort of— we think the highest ROE in the short to intermediate term at Howard Hughes is putting— when you have a very talented team— the best thing to do is put sort of more assets under them.

Speaker #1: The American people. And I can't imagine the President not wanting to unlock a trillion dollars of value for the American people. So, it's definitely something that I believe will remain a high priority.

Speaker #1: We've had multiple meetings with the administration from the president on down, all the relevant participants. And we remain optimistic that this gets resolved. Now, obviously, a lot of things on the president's plate.

Speaker #1: And that's really what we're trying to accomplish. At Vantage, and the liability side is really managed by the team that's there. And the asset side is really— is managed by Pershing Square.

Speaker #1: There's a war in Iran. Midterms coming up and various other things. But what's interesting is, whatever way the country tips on midterms, what's interesting about a resolution of Fanny and Freddie is the entire resolution can be resolved by the president without going to the Congress.

Speaker #1: And we think we can do— earn some very attractive returns on the asset side of the balance sheet. And if you have an insurance— most insurance companies are driven entirely by the liability side.

Speaker #1: And the asset side is a bit of an afterthought, a bit the way that Vantage was run, where the entire assets were outsourced to BlackRock, Goldman Sachs, to manage a 10,000 Q fixed income portfolio.

Speaker #1: And so, whether you think of it as a $500 billion deal or a $1 trillion deal, it's an important thing the President can do, with or without Congress.

Bill Ackman: Whether you think of it as a $500 billion deal or a trillion-dollar deal, it is an important thing the president can do with or without the Congress before or after midterms. We like it, we own it, and we are very constructive on the outcome here.

Speaker #1: That's not really a differentiated asset strategy. We have the ability to offer— I believe— differentiated long-term returns to Vantage. Now, once Vantage can't use capital— that's when we have— if we generate enough capital that Vantage can't use it, which I don't envision that world for quite some time— that starts to free us up the flexibility to make other investments at Howard Hughes.

Speaker #1: Before or after midterms. So we like it. We own it. And we have very constructive on the outcome here.

Speaker #2: And then, in regards to the Hertz question, we fully exited our position in Hertz, which was relatively small to begin with. After they announced an equity offering that we did not think was necessary—which we found pretty surprising, and frankly, it was a very bungled equity offering.

Ryan Israel: In regards to the Hertz question, we fully exited our position in Hertz, which was relatively small to begin with, after they announced an equity offering that we did not think was necessary, we found pretty surprising, and frankly, was a very bungled equity offering. It is unlike anything we had really seen a company do before. It was very surprising to us that they decided to issue equity for the amount and in the manner that they did because they had previously just reported results that were quite good for the Q1. They had a very strong level of liquidity. When they actually released their results last week for the Q2, they again showed pretty good results, strong levels of liquidity. So it was never really clear to us why they needed to issue equity.

Speaker #1: But the focus right now is going to be building out the asset side of Vantage's balance sheet and where the team is focused on writing good business.

Speaker #2: It's unlike anything we had really seen a company do before. It was very surprising to us that they decided to issue equity for the amount and in the manner that they did, because they had previously just reported results that were quite good for the first quarter. They had a very strong level of liquidity, and then when they actually released their results last week for the second quarter, they again showed pretty good results—strong levels of liquidity.

Speaker #1: For the insurer. But thank you for your question. Okay, let's go to Phil Barré. If I pronounced your name correctly.

Speaker #3: Yes. Perfectly. Hi, Bill. How are you? Thank you for your time. Regarding F2, my question is, which is the incentive of the government to maintain the conservatorship?

Speaker #2: So it was never really clear to us why they needed to issue equity. And so we kind of effectively lost confidence in management, and we decided to exit our position.

Ryan Israel: We kind of effectively lost confidence in management, and so we decided to exit our position. Now, to go back to your question about sort of the initial thesis and how we think about it, which I think is instructive. Ultimately, Hertz was very different from the typical investment. Normally, we are a relatively concentrated investor focusing on simple, predictable, free cash flow generative businesses. Every now and then, we will make an investment that we believe has sort of the characteristics economically of an asymmetric sort of, not a hedge per se, but an asymmetric outcome. We will allocate a very small percentage of our capital. In Hertz's case, it was generally something, before we sold around 2% in the 2% to 3% range, depending upon the day.

Speaker #3: If they are not taking any money from Fanny and Freddie as Obama did, and the second one, is what do you expect? Why do you think Trump isn't doing anything?

Speaker #2: Now, to go back to your question about the initial thesis and how we think about it—which I think is instructive—ultimately, Hertz was very different from the typical investment.

Speaker #2: Normally we are relatively concentrated investor, focusing on simple predictable free cash flow generative businesses. Every now and then, we will make an investment that we believe has sort of the characteristics economically of an asymmetric sort of— not a hedge per se, but an asymmetric outcome.

Speaker #3: Because when I hear Putin and many others, they say, "We are ready to go. We are loaded and ready." Everything is okay for releasing the both companies.

Speaker #2: And so we will allocate a very small percentage of our capital—in the Hertz case, it was generally something before we sold around 2%—in the 2 to 3% range, depending upon the day.

Speaker #3: And I don't understand which is the incentive for not doing anything. Thank you so much.

Speaker #2: And we will do that when we believe there is the opportunity to make 5 or 10 times our money in a business that otherwise would not meet our quality standards.

Ryan Israel: We will do that when we believe there is the opportunity to make five or 10 times our money in a business that otherwise would not meet our quality standards. Hertz was something that was a very levered business, had gone through bankruptcy, gone through multiple management teams, and was at, what we believe, a very depressed price when we bought it. We knew that there was some risk inherent in it. Whenever a business is highly leveraged, even relatively small negative surprises can have a very big impact on the share price.

Speaker #1: Oh, sure. It's a very good question. And you make a very good point. I think the incentive is for Fanny and Freddie to be released from conservatorship.

Speaker #2: And so Hertz was something that was a very levered business, had gone through bankruptcy, gone through multiple management teams, and was at what we believed was a very depressed price when we bought it.

Speaker #1: But in a manner that minimizes risk to the mortgage markets, right? The last thing the Treasury Secretary wants to do is see Fanny and Freddie released from conservatorship and mortgage spreads widen 25 basis points, right?

Speaker #2: And we knew that there was some risk inherent in it. And whenever a business is highly leveraged, even relatively small negative surprises can have a very big impact on the share price.

Speaker #2: And so recognizing that, but also the potential for significant share price appreciation of 5 to 10x, we decided that we would invest a very small amount of our capital with the potential to make a huge investment return if the facts played out in a very— a way that we thought was very reasonable.

Ryan Israel: And so recognizing that, but also the potential for significant share price appreciation of 5 to 10x, we decided that we would invest a very small amount of our capital with the potential to make a huge investment return if the facts played out in a way that we thought was very reasonable. While Hertz was on a very good track initially, this equity offering caused us to reassess our views. With asymmetric investments like Hertz, even though they are relatively small, once they sort of go off track in the thesis, we lose some confidence in management. We ultimately reduce the likelihood of the potential outcomes that we think got us into the investment in the first place, and we just decide to sell and move on.

Speaker #1: So it's critically important that it's done correctly. Which is why we've suggested you take first a baby step, right? Baby step number one is account for the payments that have been made on the CM Preferred stock, exercise the government warrants, list them on the stock exchange, perhaps put in some private sector people on the boards of directors of the company, maybe recruit that transaction alone will enable the recruitment of very, very talented team.

Speaker #2: And while Hertz was on a very good track initially, this equity offering caused us to reassess our views and asymmetric investments, like Hertz, even though they're relatively small, once they sort of go off track in the thesis, we lose some confidence in management.

Speaker #2: We ultimately reduced the likelihood of the potential outcomes that we think got us into the investment in the first place, and we just decided to sell and move on.

Speaker #1: But the entity still are in conservatorship at that point in time. So there literally is no risk to mortgage rates or the taxpayer. The next step is the one that's more critical for kind of the long-term future of the mortgage markets, just making sure that Fanny and Freddie are adequately capitalized and hold enough capital on their balance sheets and that the government— we believe there should be a government backstop.

Speaker #2: So we had effectively, for the funds that we managed, a very small kind of almost immaterial loss on the position overall for the funds, although it was, I think, roughly a 30% type loss on the position itself.

Ryan Israel: We had effectively, for the funds that we managed, a very small, kind of almost immaterial loss on the position overall for the funds, although it was, I think, roughly a 30%-type loss on the position itself. Fortunately, we sold the investment very quickly, and we actually avoided a lot of the significant decline. I think the shares ultimately went down 60% or so to the bottom. But we had exited before that came in large part. We think sized this one appropriately given the relative range of outcomes that could happen, but we have exited the position.

Speaker #2: Fortunately, we sold the investment very quickly and we actually avoided a lot of the significant decline I think the shares ultimately went down 60% or so to the bottom but we had exited before that it came in large part.

Speaker #1: What form that takes, we think the senior preferred, once it's— Okay, apologies. We had some technical difficulties. Why don't we go to the next question from Michael Chutney?

Speaker #2: And so we think size this one appropriately given the relative range of outcomes that could happen. But we have exited the position.

Speaker #1: Yeah, just to give you a little more granularity on that, one of our thoughts here is that we could be helpful to the company in helping manage the balance sheet risk.

Bill Ackman: Yeah. Just to give you a little more granular on that. One of our thoughts here is that we could be helpful to the company in helping manage the balance sheet risk. To that end, we helped the company execute a convert on very attractive terms with minimal dilution to the company that our understanding with management is that was going to fulfill their equity needs and their capital needs going forward. Then we were frankly shocked when they did this literally overnight equity offering on terrible terms. Just the way it was executed was about the worst execution of an equity raise we have seen in history. It just made no sense to us. So actually, I like the CEO. I think the operating team is good. I just do not understand the sponsor here and how they are managing, or the CFO.

Speaker #1: Please unmute.

Speaker #1: And to that end, we help the company execute a convert on very attractive terms. With minimal dilution to the company, that our understanding with management is that was going to fulfill their equity needs and their capital needs going forward.

Speaker #4: Hey, how's it going, Bill? Big fan. How are you?

Speaker #1: Very well.

Speaker #4: I have a question about the fees and also about the PS Ventures. Can we start with the PS Venture portion?

Speaker #1: Of course. Go ahead. What's your question?

Speaker #4: Are you going? All right. Regarding PS Ventures, are you going for a Q2 style, like crossover fund? Because I was trying to listen to the phone call on quarter, and I kind of missed some of it earlier.

Speaker #1: And then we were, frankly, shocked when they did this literally overnight equity offering on terrible terms, and just the way it was executed was about the worst execution of an equity raise we've seen in history.

Speaker #1: Sure. So basically, these will be private investments. At the inception of the entity, kind of pre-IPO companies, at various stages, kind of high-growth, probably tech-forward portfolio.

Speaker #1: There was no— it just made no sense to us. So we actually like the CEO. I think that operating team is good. I just don't understand the sponsor here and how they're managing or maybe the CFO, I don't know who's the ultimately responsible party here.

Speaker #1: What we did say on the call is we're not going to immediately sell them when they go public. One of the things— one of the value-added things that we think we can offer a private company is, unlike venture funds, many of them that are required to sell or distribute stock over time, we can be a long-term owner; we can help them navigate the public markets.

Bill Ackman: I do not know who is the ultimately responsible party here. But it makes no sense. It could still work from here. But when you own a highly levered enterprise, you want to have a lot of confidence in the capital allocation skills and financing skills of the team running the company. So there you go. Thanks for your question.

Speaker #1: But it just made no—it makes no sense. It could still work from here. But when you own a highly levered enterprise, you want to have a lot of confidence in the capital allocation skills and financing skills of the team running the company.

Speaker #1: So over time, this becomes a mix of early-stage, later-stage growth stage, and then eventually public companies. But thank you for your question. Let's go to Bradley Martin.

Speaker #1: So, there you go. Thanks for your question.

Speaker #2: Makes sense.

Ryan Israel: Makes-

Speaker #1: Yeah.

Bill Ackman: Yeah

Speaker #2: Makes sense. If I may, how are you? A follow-up.

Ryan Israel: makes sense. If I may-

Bill Ackman: I want-

Ryan Israel: I just have a follow-up.

Speaker #1: Quick, because I want to give other people a chance. Go ahead.

Bill Ackman: Quick, because I want to give other people a chance. Go ahead.

Speaker #1: Please unmute. Okay. Horseman Country. Why don't we go to— why don't you go ahead?

Speaker #2: Of course, of course. So I understand you were on your previous call. Please just correct my understanding, but if—do I understand correctly, you're intending to monetize some of the real estate exposure in Howard Hughes via third-party capital, and then redeploy that?

Ryan Israel: Of course. So I understand on your previous call, please just correct my understanding, but do I understand correctly, you are intending to monetize some of the real estate exposure in Howard Hughes via third-party capital and then redeploy that, primarily into the insurance side of things? Just curious if you could give us a little color on how you see allocating that capital. Are you still considering other acquisitions of private companies, or is it primarily going to be going? How would it be allocated exactly?

Speaker #5: Oh, yes, sir. Good morning. It's an honor. And just thank you for your advocacy. You're a blessing beyond measure to shareholders. My question is— and we had technical difficulties a minute ago when you were discussing F2— but any thoughts on why the delay in uplifting?

Speaker #2: And just into primarily into the insurance side of things. Just curious if you could give us a little color on how you see allocating that capital?

Speaker #2: Are you still considering other acquisitions of private companies, or is it primarily going to be going— how would it be allocated exactly? In the insurance space, yeah.

Speaker #5: Because, as you've said, that is such a simple step. And it wouldn't do anything to disrupt mortgage spreads. And are you at liberty to disclose the quantities of Fanny and Freddie that you picked up after the cash raise in your IPO?

Bill Ackman: Sure

Ryan Israel: in the insurance space? Yeah. Thanks.

Bill Ackman: So right now, we have purchased a USD 1 billion Howard Hughes preferred to facilitate Howard Hughes' acquisition of Vantage. The result is that today Howard Hughes only owns 50% of the economics of the Vantage business. So first priority is for Howard Hughes to own 100% of Vantage. So the first USD 1 billion or so we raise will go to buy out Pershing Square's economic interest in Vantage, and then incremental capital will go to write additional business. So imagine a world in which we found a way to create USD 1.5 billion of monetization in the real estate subsidiary. Figure USD 1 billion of that would go to repay the preferred, which would give Howard Hughes 100% of the insurance operation, and then USD 500 million would go into the capital of the insurer, which would give it the flexibility to write more business.

Speaker #1: So right now, we've advanced a billion dollars of— we purchased a billion dollar Howard Hughes preferred to facilitate Howard Hughes's acquisition advantage. The result is that today Howard Hughes only owns 50% of the economics of the Vantage business.

Speaker #1: So today, there are approximately 3%. Okay. We'll just give people a chance to come back. Hopefully, this will be the app will be more stable.

Speaker #1: So first priority is for Howard Hughes to own 100% of Vantage. So the first billion or so we raise, we'll go to buyout Pershing Square's interest in— or economic interest in Vantage.

Speaker #1: Okay. Let's go to Uncle Truth. Feel free to unmute, and then we'll go to Tequila next. Go ahead, Uncle Truth.

Speaker #1: And then incremental capital will go to write sort of additional business. So imagine a world in which we found a way to create a billion and a half of monetization.

Speaker #1: And the real estate's subsidiary figure a billion of that would go to repay the preferred, which would give Howard Hughes 100% of the insurance operation.

Speaker #6: Thanks for taking my question, Bill. My question for you is, I understand the mechanics of what you're saying about Fanny May. But what's the probability that you think that no action— I don't want to say no action, but that Fanny May doesn't make it to the major stock exchange or has the resolution in the senior preferred shares by the end of the Trump administration?

Speaker #1: And then $500 billion would go into the capital of the insurer, which would give it the flexibility to write more business. I think that's the easiest way to think about it.

Bill Ackman: That is, I think, the easiest way to think about it. Then over time, as we generate more cash, we think the highest ROE in the short to intermediate term at Howard Hughes is when you have a very talented team, the best thing to do is put more assets under them, and that is really what we are trying to accomplish. Advantage and the liability side is really managed by the team that is there, and the asset side is managed by Pershing Square, and we think we can earn some very attractive returns on the asset side of the balance sheet. Most insurance companies are driven entirely by the liability side, and the asset side is a bit of an afterthought. A bit the way that Vantage was run, where the entire assets were outsourced to BlackRock, Goldman Sachs, to manage a 10-year fixed income portfolio.

Speaker #1: And then over time, as we generate more cash, we would sort of— we think the highest ROE in the short to intermediate term at Howard Hughes is putting— when you have a very talented team, the best thing to do is put sort of more assets under them.

Speaker #1: I just assigned a very low probability to that. I mean, we've had the benefit of the president being out there very publicly. He has a track record of keeping his promises.

Speaker #1: And that's really what we're trying to accomplish. At Vantage, the liability side is really managed by the team that's there, and the asset side is managed by Pershing Square.

Speaker #1: It's in the interest of the country. It's in the interest of the Republicans generally to resolve this within the Trump administration. When the, God forbid, AOC gets control of these entity world, that's not something that the president would want to stomach as part of his legacy.

Speaker #1: And we think we can earn some very attractive returns on the asset side of the balance sheet. And if you have an insurance— most insurance companies are driven entirely by the liability side.

Speaker #1: And the asset side is a bit of an afterthought, a bit like the way that Vantage was run, where the entire assets were outsourced to BlackRock and Goldman Sachs to manage a 10,000Q fixed income portfolio.

Speaker #1: So I do think, again, we're sort of long-suffering shareholders. We've been here a long time. We've weren't selling at $17 a share when Howard Ludnick was on CMEC saying it could happen before the end of the year.

Speaker #1: That's not really a differentiated asset strategy. We have the ability to offer— I believe differentiated long-term returns to Vantage. Now, once— if Vantage can't use capital that's when we have— if we've generated enough capital that Vantage can't use it, which I don't envision that world for quite some time, that starts to free us up the flexibility to make other investments at Howard Hughes.

Bill Ackman: That's not really a differentiated asset strategy. We have the ability to offer, I believe, differentiated long-term returns to Vantage. Now, if Vantage can't use capital, if we've generated enough capital that Vantage can't use it, which I don't envision that world for quite some time, that starts to free us up the flexibility to make other investments at Howard Hughes. But the focus right now is going to be building out the asset side of Vantage's balance sheet and where the team is focused on writing good business for the insurer. Thank you for your question. Okay, let's go to Phil Barré. Hope I pronounced your name correctly.

Speaker #1: So we have experienced real volatility here, but we— at the end of the day, we believe in the facts. The fundamentals and what's in the best interest of the country and also have a pretty good understanding of the president and how he thinks.

Speaker #1: This is— will be one of the greatest deals of all time. And he will deservedly get credit for it. So we think it happens.

Speaker #1: But the focus right now is going to be building out the asset side of Vantage's balance sheet and where the team is focused on writing good business.

Speaker #1: Does it happen by midterms? My guess is probably not. Does it become an important focus afterwards? Absolutely. But thank you for your question. Let's go to Kavish.

Speaker #1: For the insurer. But thank you for your question. Okay, let's go to Phil Barrere, if I pronounced your name correctly.

Speaker #3: Yes. Perfectly. Hi there. How are you? Thank you for your time. Regarding F2, my question is, which is the incentive of the government to maintain the conservatorship if they are not taking any money from Fanny and Freddie as Obama did?

Phil Barré: Yes, perfectly. Hi, Bill. How are you? Thank you for your time. Regarding F2, my question is, what is the incentive of the government to maintain the conservatorship if they are not taking any money from Fannie and Freddie as Obama did? The second one is why do you think Trump isn't doing anything? Because when I hear Bill Ackman and many others, they said, "We are ready to go. We are loaded and ready. Everything is okay for releasing both companies." I don't understand, what is the incentive for not doing anything? Thank you so much.

Speaker #1: Please go ahead. Go ahead. We can hear you.

Speaker #7: Thanks. Yeah. Thanks. Thanks for taking my question. What's the biggest challenge you think you'd encounter while building? How would you into a modern-day ay Berkshire?

Speaker #3: And the second one, is what do you expect? Why do you think Trump isn't doing anything? Because when I hear Putin and many others, they said we are ready to go, we are loaded and ready.

Speaker #7: I ask this given the recent short-term nature of the markets. Where people want to hop onto the next big thing for quick profits. And instruments like leveraged ETFs and production markets only add to the short-term trading.

Speaker #7: And you could argue that decades or even a few years ago, investors were certainly more long-term-oriented. And I ask this because how would you use a PS US and all of your other related funds are meant to be held long-term?

Speaker #3: Everything is okay for releasing the Fannie, both companies. And I don't understand what the incentive is for not doing anything. Thank you so much.

Speaker #1: Yeah. I think it's a great question. I don't think the current state of the markets will have any negative effect on our ability to execute at Howard Hughes.

Speaker #1: Oh, sure. It's a very good question. And you make a very good point. I think the incentive is for Fanny and Freddie to be released from conservatorship.

Bill Ackman: Sure. It's a very good question, and you make a very good point. I think the incentive is for Fannie and Freddie to be released from conservatorship, but in a manner that minimizes risk to the mortgage markets, right? The last thing the Treasury secretary wants to do is see a Fannie and Freddie release from conservatorship and mortgage spreads widen 25 basis points, right? So it's critically important that it's done correctly, which is why we've suggested you take first a baby step, right? Baby step number 1 is account for the payments that have been made on the senior preferred stock, exercise the government warrants, list them on the stock exchange, perhaps put in some private sector people on the boards of directors of the company. That transaction alone will enable the recruitment of a very talented team.

Speaker #1: But in a manner that minimizes risk to the mortgage markets, right? The last thing the Treasury Secretary wants to do is see Fannie and Freddie released from conservatorship and mortgage spreads widen 25 basis points, right?

Speaker #1: We're able to recruit a phenomenal team to run Howard Hughes Insurance operations. I would argue that Mark and David are two of the top, by far the top executives in the country.

Speaker #1: They understand the potential. And they're going to execute. How quickly the world comes around to understanding we're doing— this is a market environment where people are distracted to your point by other more— I would say short-term exciting things.

Speaker #1: So it's critically important that it's done correctly. Which is why we've suggested you take first a baby step, right? Baby step number one is account for the payments that have been made on the SIEM preferred stock, exercise the government warrants, list them on the stock exchange, perhaps put in some private sector people on the boards of directors of the company, maybe recruit that transaction alone will enable the recruitment of very, very talented team.

Speaker #1: There is an enormous short-term orientation, not just to many retail investors, but there's a lot of capital that's managed in a very short-term fashion with a lot of short-term incentives.

Speaker #1: But the entity still is in conservatorship at that point in time. So there literally is no risk to mortgage rates for the taxpayer. The next step is the one that's more critical for the long-term future of the mortgage markets: just making sure that Fannie and Freddie are adequately capitalized and hold enough capital on their balance sheets, and that the government—we believe there should be a government backstop—what form that takes, we think the senior preferred, once it's all right.

Bill Ackman: But the entities still are in conservatorship at that point in time. So there literally is no risk to mortgage rates for the taxpayer. The next step is the one that's more critical for kind of the long-term future of the mortgage markets, just making sure that Fannie and Freddie are adequately capitalized and hold enough capital on their balance sheets, and that the government, we believe there should be a government backstop. What form that takes, we think the senior preferred, once it's- Hi. Okay, apologies. We had some technical difficulties. Why don't we go to the next question from Michael Katchen. Please unmute.

Speaker #1: And we think that's a very helpful fact. I mean, the reason why we were able to deploy $5 billion of capital in a business.

Speaker #1: Is we gave six examples of companies we've worked with. They wanted to own for years, but that were too expensive. And became cheap. I just think we'll be— the passage of time will reward us.

Speaker #1: And we don't— we're not trying to figure out which stock is going to go up the most in the next 90 days. I would say a very big percentage of the people investing in markets today is focused on which stock's going to go up in the next— not just 90 days.

Speaker #1: I mean, you look at the rise of one-day options. Which stock's going to go up the most in the next few hours? But that's a very good environment for someone who wants to compound their assets for their retirement, right?

Speaker #1: Because it's going to lead to very significant mispricing of securities. And mispricing of very high-quality long-term compounders and the assets advantage today are invested— the floats invested in short-term treasuries.

Speaker #1: And the surplus of the insurer or the chunk of the surplus of the insurer is invested in long-term compounders. That's going to work out very well over the next three, four, five, ten years.

Speaker #1: And it will also work out very well from a tax perspective. The people who are kind of whipping it around are incurring ordinary income every time they sell something or high rate of tax.

Speaker #1: So we like our approach. It's consistent with the way we like to live our lives. So it's something we can do over a very long term.

Speaker #2: One thing I would just add is very similar to how Mr. Buffett was able to build Berkshire because he had a very large economic interest in the company.

Speaker #3: No puedo creer.

Speaker #2: Our ability to own a significant portion of Howard Hughes is well as have our services agreement with him is very critical to making sure that in an increasingly short-term world, we can maintain a long-term orientation because we are such significant owners of the company and can help direct its longer-term action.

Speaker #2: So is the best team in the industry in place on the insurance side, our long-term orientation combined with our economic ownership to help control the destiny and make that happen is very valuable.

Speaker #1: So thank you for your question. Kavish, if I could go to Enrique. Enrique?

Speaker #8: Thank you. Yeah. I was just wondering if you could speak a little about the investments in Microsoft, Meta, and Amazon. I saw in the report you published yesterday afternoon that you're expecting or your expectation is for Amazon to grow their earnings per share on an yearly basis.

Speaker #8: The highest of probably all of your investments. So just curious about that. Thank you.

Speaker #1: Sure. So, I mean, those are all three businesses we like. I would actually look at Meta as being a slightly different business. And the reasons we like it than Microsoft and Amazon.

Speaker #1: But all three share the common characteristic that we believe— and I future growth potential of Amazon— but all three really, when you look at them, are very high-growth businesses that we think are some of the best businesses in the world that are run by incredibly capable management teams.

Speaker #1: And they're actually getting better over time, which is not something that you typically see in companies are growing beyond a trillion or 3 trillion dollar market cap in some of those cases.

Speaker #1: And we like the fact that these are businesses we've long admired but did not previously have the opportunity to own because the valuations really reflected how great the businesses were and the large amounts of future growth potential.

Speaker #1: Okay, apologies. We had some technical difficulties. Why don't we go to the next question from Michael Chutney? Please unmute.

Speaker #1: One thing I think is interesting about Meta, in particular, is that this company is growing at the fastest rate it's grown at in over a decade, despite being at a significantly larger scale.

Speaker #1: And yet it is at one of the cheaper earnings multiples that has been in a long time, a long time, because people are concerned about their spending in order to create a lot of compute capacity.

Speaker #4: How's it going, Bill? Big fan. How are you?

Michael Katchen: How's it going, Bill? Big fan. How are you?

Speaker #1: Very well.

Bill Ackman: Very well.

Speaker #4: I have a question about the fees, and also about the PS Ventures. Can we start with the PS Ventures portion?

Michael Katchen: I have a question about the fees and also about the Pershing Square Ventures. Can we start with the Pershing Square Ventures portion?

Speaker #1: We happen to think that the core business is phenomenal and is growing very, very rapidly. And therefore, we're getting the opportunity to buy the core business at a very discounted price because people are concerned about a lot of spending that is somewhat adjacent to a large degree from the core business that we actually think is going to be worth a lot of money in the future if Mark and the team can execute, which we think they're very likely to do.

Speaker #1: Of course. Go ahead. What's your question?

Bill Ackman: Of course. Go ahead. What's your question?

Speaker #4: Are you going? All right. Regarding PS ventures, are you going for like a Q2 style, like crossover fund? Because I was trying to listen to the phone call on quarter and I kind of missed some of it earlier.

Michael Katchen: All right. Regarding Pershing Square Ventures, are you going for a CO2 style, like a crossover fund? Because I was trying to listen to the phone call on quarter, and I kind of missed some of it earlier.

Bill Ackman: Sure.

Speaker #4: So based plan.

Michael Katchen: What is that game plan?

Speaker #1: Basically, these will be private investments. At the inception of the entity, kind of pre-IPO companies, at various stages, kind of high growth, probably tech-forward portfolio.

Bill Ackman: Well, basically, these will be private investments at the inception of the entity, kind of pre-IPO companies at various stages, kind of high growth, probably tech-forward portfolio. What we did say on the call is we are not going to immediately sell them when they go public. One of the value-added things that we think we can offer a private company is, unlike venture funds, many of them that are required to sell or distribute stock over time, we can be a long-term owner. We can help them navigate the public markets. So over time, this becomes a mix of early stage, later stage, growth stage, and then eventually public companies. But thank you for your question. Let's go to Bradley Martin. Please unmute. Okay. Horseman Country, why don't you go ahead.

Speaker #1: So we feel like we're getting a free option on a very valuable amount of compute and a business that Meta is building while at the same time getting a very discounted valuation on an incredible core business.

Speaker #1: What we did say on the call is we're not going to immediately sell them when they go public. One of the things, one of the value-added things that we think we can offer a private company is unlike venture funds, many of them that are required to sell or distribute stock over time, we can be a long-term owner we can help them navigate the public markets.

Speaker #1: So that's really the reason we like Meta. Did you want to ask something?

Speaker #8: No, thank you for that.

Speaker #1: And for Microsoft and Amazon, the way I think about that is those are two very simple and similar business models in the sense that they effectively are the world's— along with Google— kind of three leading cloud businesses.

Speaker #1: So over time, this becomes a mix of early-stage, later-stage, growth-stage, and then eventually public companies. But thank you for your question. Let's go to Bradley Martin.

Speaker #1: We're very excited about the long-term growth potential of those businesses. And we actually think that people are underestimating how quickly they will grow. Because Amazon has so much of its business geared towards the cloud business and has rapidly growing retail business as well, we think that the opportunity for them to grow a little bit faster perhaps than Microsoft is there.

Speaker #1: Please unmute. Okay. Horseman Country. Why don't we go to why don't you go ahead?

Speaker #1: But I would not be surprised if Microsoft's numbers in terms of growth are actually a little bit higher and more similar to Amazon's over time to the extent that they continue to also execute really well in the cloud strategy.

Speaker #5: Oh yes, sir. Good morning. It's an honor. And just thank you for your advocacy. You're a blessing beyond measure to shareholders. My question is—and we had technical difficulties a minute ago when you were discussing F2.

[Shareholder 2]: Yes, sir. Good morning. It's an honor, and just thank you for your advocacy, your blessing beyond measure to shareholders. My question is, and we had technical difficulties a minute ago when you were discussing F2, but any thoughts on why the delay in up-listing? Because as you have said, that is such a simple step, and it would not do anything to disrupt mortgage spreads. And are you at liberty to disclose the quantities of Fannie and Freddie that you picked up after the cash raise in your IPO?

Speaker #1: But long term, we think the capital spending they're doing has depressed their share prices because people are not giving them credit for what we think are going to be excellent longer-term economic returns.

Speaker #1: And when that story starts to bear out, you would expect to see a very significant acceleration in the rate of revenue growth and earnings per share growth of these businesses as they again become less capital-intensive because now you've spent the money, but you're finally getting the revenue and the associated earnings attached to that.

Speaker #5: But any thoughts on why the delay in uplifting? Because as you've said, that is such a simple step. And it wouldn't do anything to disrupt mortgage spreads.

Speaker #5: And are you at liberty to disclose the quantities of Fanny and Freddie that you picked up after the cash raise in your IPO?

Speaker #1: And we think that they're going to be very attractive shareholdings from here. So thank you for your question. Let's go to the commander. Hey, go ahead, Ron.

Bill Ackman: Today, they are approximately 3%.

Speaker #1: Luhrmann. Yes, we can.

Speaker #9: Okay. I was curious that when you presented your plan to the government, your three-step plan to announce for getting the loan to uplift and then execute the warrants, what was the government's— were they receptive to agreeing that the loan has been repaid in full and well over the top?

Speaker #9: Were they— or did they just say, "Okay," or was there any pushback from them? Or did they agree that, "Yeah, we've more than repaid the loan"?

Speaker #1: So my goal in keeping a good relationship with the government is to not disclose conversations I've had with the government. But I think that the summary I gave before is accurate.

Speaker #1: We maintain a— our investment in the companies or confident that the right thing is going to happen here. And I really think that's the best way to summarize it.

Speaker #1: Let's go.

Speaker #9: Okay. Thank you.

Speaker #1: Thank you very much. We'll go to the Mossad. We have the Mossad on our call. Go ahead, Mossad. Yeah, please unmute. Okay. We're going to go to Daniel Nuri.

Speaker #1: If you want to unmute your line. Got to unmute in order to ask a question. There we go, Daniel.

Speaker #9: Can you hear me?

Speaker #1: Now we can. Yes.

Speaker #9: Hi. Hi, Bill. How you doing? I'm actually here with my brother. We are joint investors in Fannie and Freddie. So he actually has a question for you.

Speaker #1: Bill, I just want to.

Speaker #9: I've got a question.

Speaker #1: Yeah. I was just going to say, how about no more Fannie Freddie questions? We got too many of them. But go ahead if it's not Fannie Freddie, I'm happy to talk about it.

Speaker #9: If it's not Fannie Freddie, I'm happy to talk about it.

Speaker #1: It actually is Fannie and Freddie. Is that going to be an issue, or?

Speaker #9: I just feel like we killed that one already. So why don't you get— come back with another one. We're going to go to David.

Speaker #1: Okay. David Skadron, please.

Speaker #10: Hey, Mr. Ackman. I read recently about your investment in Uber. And I have recently been driving in or haven't been driving in self-driving Waymos and Teslas.

Speaker #10: And I was just kind of blown away by the experience because it was cheaper. And you just have a personal lounge. And I was curious kind of your long-term vision of ride-sharing.

Speaker #10: And how Uber stays valuable if these other cars are much cheaper and a better experience?

Speaker #1: Yeah. So I would say very high level. I think we're bullish on autonomous vehicles. And that makes us more bullish on Uber as opposed to less bullish.

Speaker #1: But Ryan, why don't you go ahead and take that one?

Speaker #10: Yeah. And I think you picked up on an important point, which is ultimately the cheaper that these rides become, the more likely it is that more people will take them at an increasing amount.

Speaker #10: And therefore, it really expands the addressable market, as Bill mentioned. And I think the important thing is just because there are other alternatives without a driver, which is important to lower the ultimate cost of the vehicle through autonomous, that doesn't mean that Uber won't still serve an increasingly valuable place in the market.

Speaker #10: So for example, what does Uber bring? Well, Uber, on the one hand, it aggregates demand and supply. But it does that across really everywhere in the United States and in many markets to an alternative where you have an autonomous vehicle company that owns its entire supply.

Speaker #10: That might work in certain select markets, but the number of vehicles that you need everywhere across the United States, we believe, is too enormous in order to meet the demand of people.

Speaker #10: And therefore, we think that while AVs can be very great experiences, we've written in them ourselves and also like the experience, we ultimately think that there will need to be both.

Speaker #10: There'll need to be AVs that can exist to meet certain demands at certain times, but there's going to need to be a very, very large base of human drivers for the long term in order to meet the overall demands, particularly as people continue to take more trips.

Speaker #10: So we think that joint solution means you can't just have AVs, and there won't be enough of them to meet the ups and downs that you need.

Speaker #10: You'll need some swing capacity for sure. And we think that Uber services are still very valuable because, as a consumer, what we want is to be able to order a car very quickly and for the lowest cost.

Speaker #10: And having the most amount of vehicles driver or driverless is very important to that. You need to be able to do ultimately the upkeep of the vehicles, the maintenance of the vehicles, the storing of the vehicles, the charging of them.

Speaker #10: And so we think that Uber provides all of these services in a way where they really understand each local market they operate in. They know how to route which driver to which consumer.

Speaker #10: And they have a brand and we think that people really like the ability to go to one app that they trust to be able to route them to all the different ride options.

Speaker #10: So I would say, in general, that makes us very bullish on AV. I would also point out lastly, though, the important thing to remember about Uber's business is that Uber is half a rideshare company and half a delivery company.

Speaker #10: And we think that both aspects of the business are great. It's also half US and half international. And a lot of the focus on the business overall is about this potential risk that we think is an opportunity for really only the US rideshare business because outside of the US, it is much less developed.

Speaker #10: And we think it'll be even harder for that to take off, although it's been really slower to develop everywhere around the world. And then half of the business is related to delivery, which you think has a very distinct characteristic.

Speaker #10: So we think ultimately we think there are a lot of aspects outside of this kind of core US AV market perception of a risk where Uber is really thriving and will continue to thrive.

Speaker #1: So do you think that it's possible that the existing fleet of Uber vehicles could become autonomous, like retrofitted with, I don't know, say, Nvidia makes a solution that makes it so the current fleet?

Speaker #1: Do you think that?

Speaker #10: Remember, Uber is not really a fleet operator. Uber is a platform where you order a ride. People who drive for Uber today could make the decision, in theory, to retrofit my guess is what will happen is that for the extent there are vehicles in the future where Nvidia or there's a dozen other people who are working on very good technology that would ultimately go to OEM manufacturers like Ford or GM or others to make AV cars, people in the future might decide to put purchase those cars, put them on the Uber platform, and then ultimately much like the driver makes a certain amount of money from Uber on each ride, the person who finances that AV vehicle that they've purchased would also be making that equivalent amount of money.

Speaker #10: So we think that's an alternative. And for people who decide to go that route, there really is no alternative other to Uber as well.

Speaker #10: So we think that's an additional kind of lever of growth in the AV world.

Speaker #1: Okay. We're going to take one we're going to give it to someone else a chance, okay?

Speaker #10: Thank you so much. Thank you.

Speaker #1: No problem. Okay. Let's go to Perry Pursue. Why don't you go ahead and ask your question? And please unmute your line. Okay. Massad, were you able to unmute?

Speaker #1: Okay. Let's go to Achilles. Achilles, go ahead and unmute your line if you'd like.

Speaker #5: Good morning. Thank you for having me. Quick question. I saw the recent announcement about Netflix position. And I'm extremely bullish on that position, but I wanted your opinion when it comes to specifically when it comes to IP.

Speaker #5: Are you going to first of all, are you going to be basically trying to be more active in advising management, or is it just a position that you're going into?

Speaker #5: And what do you believe second question is, what do you believe the value of the IP in Netflix is? Thank you.

Speaker #1: We have a lot of confidence in management. They've done an incredible job navigating big transition in their business. And this is one where if we have a great idea for the company, we're happy to share, but we view this largely as a passive investment behind a great team.

Speaker #10: Yeah. And I think to your question, one of the things that we like about what they've done, because when we own Netflix a little over four years ago, there were a lot of developing questions about competition.

Speaker #10: They were developing questions about the business model, particularly would you need to introduce advertising? Would Netflix be able to do that? And I think what we've seen consistently over time, going back much longer than four years prior when we owned the business, is really every step of the way, the company has been able to surprise to the upside, if you will, in how well they've navigated an increasingly changing market.

Speaker #10: So now the way we look at the business is a lot of the questions that existed four years ago or 10 years ago have been answered.

Speaker #10: Netflix is by far the leader a lot of the up-and-coming companies that we're throwing increasingly amounts of content, which to your question ultimately creates IP, have really pulled back on that because they've not been able to build a model that is as profitable and lucrative as Netflix.

Speaker #10: And so now Netflix in our view is really one streaming competition wars, if you will, the benefit of having the largest platform by far, which Netflix has, is that allows you to spend more money on content or IP than anybody else, which means that your cost per subscriber is lower than anybody else.

Speaker #10: That cost advantage is great for the company in terms of its improving profit margins. But also means that you can charge more for that, which is great for revenues.

Speaker #10: And so it's a really interesting business model where it keeps getting better over time because of its scale advantage. And every new Netflix subscriber gets the benefit not just of what they spend this year, but for all prior years that they've spent.

Speaker #10: So we think the business uniquely becomes more valuable to each incremental customer every single year.

Speaker #1: Okay. Let's go. You're welcome. Let's go to Ellie Daschiff. Or Eli Daschiff.

Speaker #3: Hey, Bill. How are you?

Speaker #1: Very well.

Speaker #3: Last week, you mentioned World Book as a cautionary tale for information businesses. In the letter, you argue AI accelerates demand for S&P's proprietary data, but that assumes that the value stays to the data owner, not the model layer.

Speaker #3: What keeps the pricing power with S&P and not whoever controls an agent?

Speaker #10: Sure. No, it's a great question. So the way we think about S&P is roughly 80% of its business relates to ultimately what we call kind of these franchise indicy benchmarks.

Speaker #10: So for example, their largest business is a ratings business, the S&P ratings, which rates the debt of a lot of companies. The reason that's so valuable is in theory, one could say, well, AI could rate this why do you need a human?

Speaker #10: The reason why is it's an accepted standard by which insurance companies capital market participants on the debt side really everybody is accepted for decades that is the gold standard in terms of getting a rating.

Speaker #10: And what that does is it provides a huge cost of capital advantage to the person buying that rating. That advantage in the lower cost of interest is many multiples of the cost of getting that rating.

Speaker #10: And so that self-reinforcing mechanism where it's the standard by which people are used to agreeing on is incredibly powerful. And that really doesn't change in an AI world because there is no reason why having an AI agent rate you for your debt for less money creates the same value because it wouldn't allow people wouldn't accept that in the way they've accepted S&P's ratings.

Speaker #10: For decades. For example, another part of their business that they benchmark is they actually own the S&P Dow Jones kind of franchise. So whenever people use that product to trade, and they put that name on it, they pay a royalty for doing so to S&P Global.

Speaker #10: That is an accepted benchmark that we don't really think is going to be disrupted because people rely on it. Very similarly, they have a Platz energy franchise, which is like the standard for assessing a huge number of physical delivery oil and other commodities around the world.

Speaker #10: And everybody agrees that is the benchmark. It is written into contracts on which people trade. And even if there is more AI solutions, that network effect where everybody relies on it because they think it's valuable doesn't really go away because there's no way to get started with an alternative.

Speaker #10: And that's 80% of the business. There are some other parts that are much smaller where we think maybe three to five percent of the business could be somewhat subject to potential AI risk, but that has cast a pall over the entirety of the 97 plus percent of the business that we think is in at risk.

Speaker #10: And we think the management team is very, very risk for a small percentage of the business. And so we thought this was a unique opportunity to buy an incredible franchise at a really discounted valuation because the market was misperceiving how AI could apply to the vast majority of its really indisruptible business.

Speaker #1: Okay. Let's go to the I think this will have to be the last question. James Dicenzo. Please go ahead.

Speaker #10: Good morning, gentlemen. Congratulations on the IPO and hats off on your transparency. Question. You added some new holdings, and you're not on Franny, of course, but we're going to talk about the intercontinental exchange.

Speaker #10: There's a lot of useful things in that company. Particularly in the mortgage side, but in many other respects. Do you have anything to share beyond the commentary you provided in the news release on the intercontinental exchange that you like going forward?

Speaker #10: I mean, maybe just the one thing I would say to very high level, and I do think that we obviously tried to write the things that we like about it the most, but there are very few businesses that we have come across where they have a 20-year operating record where they're able to grow their earnings every single year.

Speaker #10: And while some people could say, well, that must mean that there are some sort of accounting games or others, I don't think that's at all the case here.

Speaker #10: What it reflects is how unique this business model is where it produces a steadily growing stream of profits because over 70% of its business, which does not include the mortgage business that you referenced, that we really like, which is a good chunk of the remainder of the business, is really about exchanges.

Speaker #10: It reflects the fact that when markets are good, people want to trade more. It reflects the fact that as the economies grow, people need to trade more.

Speaker #10: For example, ICE's primary franchise is really this energy business where they own the contract on Brent crude or they're increasingly in some natural gas in Europe.

Speaker #10: And those are contracts where as the world grows, people need to use more of it, producers need to hedge their production, people who want to protect themselves from incremental risk if they're buying oil or natural gas need to hedge.

Speaker #10: So there's kind of this ever-growing upward lift. And in periods of volatility where stocks might be down, that's a very small part of their business.

Speaker #10: And so what it means is more people need to trade to protect themselves from the wide range of things that can happen. Volatility is the friend of this business.

Speaker #10: And so it's a very durable franchise and it's one of the few businesses that I can kind of think of off the top of my head where you've seen that reflected in 20 years of positive growth, partially reflecting the great business that it is, but also the really talented owner-operator mentality that Jeff Brecker, who leads the business and has really been the driving force of the business over time, has created.

Speaker #10: And so I would just highlight that I think it's one of the best businesses that we've followed. It's got an incredible management team and it's a very great kind of founder orientation that is done some wonderful things and is really at times where people in the stock market have doubted him, generally been entirely right about the things that he's done.

Speaker #10: So I think it's a wonderful business, a great management team. And the fact that it's had such consistent earnings growth due to both of those factors I think is something that is very underappreciated by the markets.

Speaker #10: Thank you, Ewan. Ewan Bill, for you've made me a better investor.

Speaker #1: Okay. Very kind of you. And we just want to thank everyone for joining us. And we look forward to seeing you guys next quarter.

Speaker #1: Record where they're able to grow their earnings every single year. And while some people could say, well, that must mean that there are some sort of accounting gains or others, I don't think that's at all the case here.

Bill Ackman: Invitation or inducement to deal in securities. I guess we're just going to have a conversation. But we welcome your questions. We'll take them in the order in which they're received. So let's see if I can do this. James Kiernan, please unmute your line, and we'd be delighted to take your question. James, you have to unmute. We're going to take the next person. Let's try Lumi Casanova. You have to unmute your mic.

Speaker #1: What it reflects is how unique this business model is, where it produces this steadily growing stream of profits because over 70% of its business—which does not include the mortgage business that you referenced, that we really like, which is a good chunk of the remainder of the business—is really about exchanges.

Speaker #1: It reflects the fact that when markets are good, people want to trade more. It reflects the fact that as economies grow, people need to trade more.

Speaker #1: For example, ICE's primary franchise is really this energy business, where they own the contract on Brent crude, or increasingly are into natural gas in Europe.

Speaker #1: And those are contracts where, as the world grows, people need to use more of it. Producers need to hedge their production, and people who want to protect themselves from incremental risk—if they're buying oil or natural gas—need to hedge.

Speaker #1: So there's kind of this ever-growing upward lift, and in periods of volatility where stocks might be down, that's a very small part of their business.

Speaker #1: And so, what it means is that more people need to trade to protect themselves from the wide range of things that can happen. Volatility is the friend of this business.

Lumi Casanova: Hello?

Bill Ackman: Hi, we can hear you now.

Lumi Casanova: Oh, hi, Bill. I've got a quick question, and thank you again for taking questions on Spaces. That's unprecedented. I think it's leading the way. This should be how every business does their disclosures, in my opinion. But onto my question. Indirectly, Pershing Square owns quite a large stake in US Syntech, which currently has $16 trillion under management. Do you think that will ever materially affect the balance sheet of Pershing Square, and how would you unlock that potential?

Speaker #1: And so it's a very durable franchise, and it's one of the few businesses that I can think of off the top of my head where you've seen that reflected in 20 years of positive growth. That's partially reflecting the great business that it is, but also the really talented owner-operator mentality that Jess Brecker, who leads the business and has really been the driving force of the business over time, has created.

Speaker #1: And so I would just highlight that I think it's one of the best businesses that we've followed. It's got an incredible management team. It's a very great kind of founder orientation that has done some wonderful things and is really, at times where people in the stock market have doubted him, generally been entirely right about the things that he's done.

Bill Ackman: I'm not sure if I understand your question, to be honest. Could you be a little more explicit?

Speaker #1: So I think it's a wonderful business, with a great management team. And the fact that it's had such consistent earnings growth, due to both of those factors, I think is something that is very underappreciated by the markets.

Lumi Casanova: Yeah. No, so through F2, Fannie and Freddie, you own two 10% stakes in the Commons, which owns 50% in US Syntech. US Syntech is kind of one of the most unknown companies, but it is huge. It manages $16 trillion. I believe there is a lot of potential unlocked value for Pershing Square shareholders, which I am a shareholder, potentially. I was wondering if you were thinking about that, but never know.

Speaker #2: Thank you, Ewan. Ewan, Bill, you've made me a better investor.

Bill Ackman: Yeah. I am not sure exactly what you are referring to. I know Fannie and Freddie have some joint securitization and other sort of assets. We have not assigned any incremental value to them beyond the core value of the two kind of franchise companies. They are obviously very uniquely positioned businesses. They have been effectively stewards of the government for the last 15 or more years. One of the benefits, of course, for them to kind of become public companies again and go back to kind of private enterprise, the ability to recruit talent. They have among the greatest data sets of any company in the world. There is a ton of unmonetized, I am sure, assets. I think Director Pulte has been trying to take some steps in that direction in making the enterprises more efficient.

Bill Ackman: But we think they are amazing companies, incredibly strong market position, and it is time for them not to be wards of the state. So certainly with you there. But thanks so much for your question. Let us go to the Marsh Centurion. Feel free to ask your question. But you have to turn off your mic and turn on your mic. Go ahead, Marsh Centurion. We are going to go with-

[Shareholder 1]: Okay. Oh, there we go. Can you hear me?

Bill Ackman: Yes, we can now.

[Shareholder 1]: Great. Sorry. Just a question on PSUS and a follow-up on Howard Hughes if you have got the time. Related to two investment theses on Fannie and Freddie, there will probably be a few questions on that today. You started off the year mentioning it was one of your, or maybe your best idea for 2026. How should we think about it kind of looking at the PSUS sizing, how should we think about maybe your current conviction on Fannie and Freddie, and any progress you have on that? Also, if you could give us an update on Hertz and your previous thesis on that.

Bill Ackman: Sure. I will take F2 and Ryan, why don't you handle Hertz? Our views on Fannie and Freddie really have not changed. From an investment perspective, what is interesting about these companies is they are sort of perpetual options on an outcome that we think is a likely outcome. We think and we believe the president and Republicans generally believe it is critically important that these entities leave conservatorship before the end of the Trump administration. The reason for that is, in the event someday Democrats control the executive branch in an AOC presidency, the concern would be you would not want Fannie and Freddie and the cash they generate to be expropriated in the way that that cash was expropriated during the Obama administration and used for purposes without congressional oversight.

Bill Ackman: I think that is one, I would say, important strategic reason for this to be resolved in the administration. The president himself has been very forward-leaning in saying that he wants to quote unquote, "Take these companies public again," that there is a USD 1 trillion of value to be unlocked for the American people. I cannot imagine the president not wanting to unlock USD 1 trillion of value for the American people. So it is definitely something that I believe will remain a high priority. We have had multiple meetings with the administration, from the president on down, all the relevant participants, and we remain optimistic that this gets resolved. Now, obviously, a lot of things on the president's plate. There is a war in Iran, midterms coming up, and various other things.

Bill Ackman: What is interesting is whatever way the country tips on midterms, what is interesting about a resolution of Fannie and Freddie is the entire resolution can be resolved by the president without going to the Congress. Whether you think of it as a $500 billion deal or a trillion-dollar deal, it is an important thing the president can do with or without the Congress before or after midterms. We like it, we own it, and we are very constructive on the outcome here.

Ryan Israel: In regards to the Hertz question, we fully exited our position in Hertz, which was relatively small to begin with, after they announced an equity offering that we did not think was necessary, we found pretty surprising, and frankly, was a very bungled equity offering. It is unlike anything we had really seen a company do before. It was very surprising to us that they decided to issue equity for the amount and in the manner that they did because they had previously just reported results that were quite good for the Q1. They had a very strong level of liquidity. When they actually released their results last week for the Q2, they again showed pretty good results, strong levels of liquidity. So it was never really clear to us why they needed to issue equity.

Ryan Israel: We kind of effectively lost confidence in management, and so we decided to exit our position. Now, to go back to your question about sort of the initial thesis and how we think about it, which I think is instructive. Ultimately, Hertz was very different from the typical investment. Normally, we are a relatively concentrated investor focusing on simple, predictable, free cash flow generative businesses. Every now and then, we will make an investment that we believe has sort of the characteristics economically of an asymmetric sort of, not a hedge per se, but an asymmetric outcome. We will allocate a very small percentage of our capital. In Hertz's case, it was generally something, before we sold around 2% in the 2% to 3% range, depending upon the day.

Ryan Israel: We will do that when we believe there is the opportunity to make five or 10 times our money in a business that otherwise would not meet our quality standards. Hertz was something that was a very levered business, had gone through bankruptcy, gone through multiple management teams, and was at, what we believe, a very depressed price when we bought it. We knew that there was some risk inherent in it. Whenever a business is highly leveraged, even relatively small negative surprises can have a very big impact on the share price.

Ryan Israel: And so recognizing that, but also the potential for significant share price appreciation of 5 to 10x, we decided that we would invest a very small amount of our capital with the potential to make a huge investment return if the facts played out in a way that we thought was very reasonable. While Hertz was on a very good track initially, this equity offering caused us to reassess our views. With asymmetric investments like Hertz, even though they are relatively small, once they sort of go off track in the thesis, we lose some confidence in management. We ultimately reduce the likelihood of the potential outcomes that we think got us into the investment in the first place, and we just decide to sell and move on.

Ryan Israel: We had effectively, for the funds that we managed, a very small, kind of almost immaterial loss on the position overall for the funds, although it was, I think, roughly a 30%-type loss on the position itself. Fortunately, we sold the investment very quickly, and we actually avoided a lot of the significant decline. I think the shares ultimately went down 60% or so to the bottom. But we had exited before that came in large part. We think sized this one appropriately given the relative range of outcomes that could happen, but we have exited the position.

Bill Ackman: Yeah. Just to give you a little more granular on that. One of our thoughts here is that we could be helpful to the company in helping manage the balance sheet risk. To that end, we helped the company execute a convert on very attractive terms with minimal dilution to the company that our understanding with management is that was going to fulfill their equity needs and their capital needs going forward. Then we were frankly shocked when they did this literally overnight equity offering on terrible terms. Just the way it was executed was about the worst execution of an equity raise we have seen in history. It just made no sense to us. So actually, I like the CEO. I think the operating team is good. I just do not understand the sponsor here and how they are managing, or the CFO.

Bill Ackman: I do not know who is the ultimately responsible party here. But it makes no sense. It could still work from here. But when you own a highly levered enterprise, you want to have a lot of confidence in the capital allocation skills and financing skills of the team running the company. So there you go. Thanks for your question.

Ryan Israel: Makes-

Bill Ackman: Yeah

Ryan Israel: makes sense. If I may-

Bill Ackman: I want-

Ryan Israel: I just have a follow-up.

Bill Ackman: Quick, because I want to give other people a chance. Go ahead.

Ryan Israel: Of course. So I understand on your previous call, please just correct my understanding, but do I understand correctly, you are intending to monetize some of the real estate exposure in Howard Hughes via third-party capital and then redeploy that, primarily into the insurance side of things? Just curious if you could give us a little color on how you see allocating that capital. Are you still considering other acquisitions of private companies, or is it primarily going to be going? How would it be allocated exactly?

Bill Ackman: Sure

Ryan Israel: in the insurance space? Yeah. Thanks.

Bill Ackman: So right now, we have purchased a USD 1 billion Howard Hughes preferred to facilitate Howard Hughes' acquisition of Vantage. The result is that today Howard Hughes only owns 50% of the economics of the Vantage business. So first priority is for Howard Hughes to own 100% of Vantage. So the first USD 1 billion or so we raise will go to buy out Pershing Square's economic interest in Vantage, and then incremental capital will go to write additional business. So imagine a world in which we found a way to create USD 1.5 billion of monetization in the real estate subsidiary. Figure USD 1 billion of that would go to repay the preferred, which would give Howard Hughes 100% of the insurance operation, and then USD 500 million would go into the capital of the insurer, which would give it the flexibility to write more business.

Bill Ackman: That is, I think, the easiest way to think about it. Then over time, as we generate more cash, we think the highest ROE in the short to intermediate term at Howard Hughes is when you have a very talented team, the best thing to do is put more assets under them, and that is really what we are trying to accomplish. Advantage and the liability side is really managed by the team that is there, and the asset side is managed by Pershing Square, and we think we can earn some very attractive returns on the asset side of the balance sheet. Most insurance companies are driven entirely by the liability side, and the asset side is a bit of an afterthought. A bit the way that Vantage was run, where the entire assets were outsourced to BlackRock, Goldman Sachs, to manage a 10-year fixed income portfolio.

Bill Ackman: That's not really a differentiated asset strategy. We have the ability to offer, I believe, differentiated long-term returns to Vantage. Now, if Vantage can't use capital, if we've generated enough capital that Vantage can't use it, which I don't envision that world for quite some time, that starts to free us up the flexibility to make other investments at Howard Hughes. But the focus right now is going to be building out the asset side of Vantage's balance sheet and where the team is focused on writing good business for the insurer. Thank you for your question. Okay, let's go to Phil Barré. Hope I pronounced your name correctly.

Phil Barré: Yes, perfectly. Hi, Bill. How are you? Thank you for your time. Regarding F2, my question is, what is the incentive of the government to maintain the conservatorship if they are not taking any money from Fannie and Freddie as Obama did? The second one is why do you think Trump isn't doing anything? Because when I hear Bill Ackman and many others, they said, "We are ready to go. We are loaded and ready. Everything is okay for releasing both companies." I don't understand, what is the incentive for not doing anything? Thank you so much.

Bill Ackman: Sure. It's a very good question, and you make a very good point. I think the incentive is for Fannie and Freddie to be released from conservatorship, but in a manner that minimizes risk to the mortgage markets, right? The last thing the Treasury secretary wants to do is see a Fannie and Freddie release from conservatorship and mortgage spreads widen 25 basis points, right? So it's critically important that it's done correctly, which is why we've suggested you take first a baby step, right? Baby step number 1 is account for the payments that have been made on the senior preferred stock, exercise the government warrants, list them on the stock exchange, perhaps put in some private sector people on the boards of directors of the company. That transaction alone will enable the recruitment of a very talented team.

Bill Ackman: But the entities still are in conservatorship at that point in time. So there literally is no risk to mortgage rates for the taxpayer. The next step is the one that's more critical for kind of the long-term future of the mortgage markets, just making sure that Fannie and Freddie are adequately capitalized and hold enough capital on their balance sheets, and that the government, we believe there should be a government backstop. What form that takes, we think the senior preferred, once it's- Hi. Okay, apologies. We had some technical difficulties. Why don't we go to the next question from Michael Katchen. Please unmute.

[Shareholder 2]: How's it going, Bill? Big fan. How are you?

Bill Ackman: Very well.

[Shareholder 2]: I have a question about the fees and also about the Pershing Square Ventures. Can we start with the Pershing Square Ventures portion?

Bill Ackman: Of course. Go ahead. What's your question?

[Shareholder 2]: All right. Regarding Pershing Square Ventures, are you going for a CO2 style, like a crossover fund? Because I was trying to listen to the phone call on quarter, and I kind of missed some of it earlier.

Bill Ackman: Sure.

[Shareholder 2]: What is that game plan?

Bill Ackman: Well, basically, these will be private investments at the inception of the entity, kind of pre-IPO companies at various stages, kind of high growth, probably tech-forward portfolio. What we did say on the call is we are not going to immediately sell them when they go public. One of the value-added things that we think we can offer a private company is, unlike venture funds, many of them that are required to sell or distribute stock over time, we can be a long-term owner. We can help them navigate the public markets. So over time, this becomes a mix of early stage, later stage, growth stage, and then eventually public companies. But thank you for your question. Let's go to Bradley Martin. Please unmute. Okay. Horseman Country, why don't you go ahead.

[Shareholder 3]: Yes, sir. Good morning. It's an honor, and just thank you for your advocacy, your blessing beyond measure to shareholders. My question is, and we had technical difficulties a minute ago when you were discussing F2, but any thoughts on why the delay in up-listing? Because as you have said, that is such a simple step, and it would not do anything to disrupt mortgage spreads. And are you at liberty to disclose the quantities of Fannie and Freddie that you picked up after the cash raise in your IPO?

Bill Ackman: Today, they are approximately 3%.

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