Pershing Square Q3 Fee Earnings Rise as GAAP Results Swing to Loss

Pershing Square Inc. (NYSE: PS) reported higher recurring fee earnings and fee-paying assets under management for the third quarter of 2026, but swung to a GAAP loss as performance-fee revenue disappeared, compensation expense rose and investment gains were substantially lower than a year earlier.

The alternative asset manager recorded a net loss attributable to Pershing Square of $19.9 million, or $0.05 per share, for the quarter ended September 30. That compared with attributable net income of $155.5 million, or $0.39 per share, in the third quarter of 2025. Total GAAP revenue declined to $56.6 million from $66.2 million, while the company posted a $20.1 million operating loss after generating operating income of $24.2 million a year earlier.

The GAAP results included $70.5 million of employee compensation and benefits, up from $5.7 million in the prior-year period. Pershing Square classified $64.8 million of the latest quarter’s compensation as non-cash or non-recurring for purposes of its non-GAAP reconciliation. Total GAAP expenses rose to $76.7 million from $41.9 million.

Performance fees fell to zero from $3.9 million, while GAAP management fees declined to $56.6 million from $62.3 million. The latter figure included $19 million of contra-revenue tied to non-cash amortization of intangible assets associated with the combined transaction and the HHH services agreement.

Non-operating income also fell sharply, to $14.8 million from $138.1 million. The latest quarter included a $19.2 million unrealized gain on Howard Hughes Holdings shares, compared with a $132 million gain a year earlier, as well as a $3.5 million unrealized loss on PSUS shares.

Recurring fee earnings increase

On a non-GAAP basis, management fees before contra-revenue rose 15% to $75.6 million. The new PSUS vehicle contributed $23 million of management fees, while Pershing Square Holdings generated $47.2 million. HHH base management fees were $3.8 million, and private-fund management fees totaled $1.7 million.

Fee-related earnings increased 13% to $63.7 million as the FRE margin widened to 84.2% from 82.3%. FRE revenue rose 10% to $75.6 million despite the absence of preferred performance fees, which contributed $2.7 million in the prior-year quarter.

Pre-tax distributable earnings rose 8% to $61 million. After $11.5 million of taxes and related payables, distributable earnings declined 12% to $49.5 million, or $0.12 per share, from $56.5 million, or $0.14 per share. Pershing Square became subject to U.S. federal, state and local corporate income taxes following its corporate conversion in connection with the combined IPO; it did not incur corporate income tax before the third quarter of 2026.

For the first nine months of 2026, fee-related earnings rose 16% to $167.4 million. Distributable earnings declined 4% to $151.5 million, or $0.38 per share, while the GAAP net loss attributable to the company was $210.2 million, or $0.53 per share.

Fee-paying assets reach $23 billion

Fee-paying assets under management increased 3.2% during the quarter to $23 billion. Market appreciation added $813 million, partly offset by $112 million of outflows. Permanent capital accounted for $22.5 billion, or 98% of total fee-paying AUM.

PSH remained the largest source of fee-paying assets at $13.3 billion, followed by PSUS at $4.8 billion and HHH at $4.4 billion. Private funds accounted for $463 million.

Total AUM rose 0.9% during the quarter to $32.8 billion, as an $836 million increase in market value and $18 million of inflows outweighed $565 million of outflows. Over the nine months ended September 30, total AUM increased 6.9%, while fee-paying AUM grew 11.1%, supported by inflows associated with PSUS. Those gains were partly offset by negative market-value changes and withdrawals, including redemptions by investors seeking to participate in the combined IPO and private placement.

At quarter-end, Pershing Square reported $939 million of cash and investments and $297 million of outstanding debt, leaving net cash and investments of $642 million, or $1.61 per share.

The company paid a dividend of $0.103 per share on October 20 to shareholders of record as of October 12. It did not provide new quantitative guidance in the presentation. Pershing Square said its longer-term growth is principally tied to compounding assets under management and opportunistically launching permanent-capital vehicles.

The company cautioned that forward-looking statements remain subject to risks and uncertainties that could cause actual results to differ materially from management’s expectations. It also noted that its non-GAAP measures and AUM calculations may not be comparable with similarly named metrics reported by other asset managers, and that past investment performance does not guarantee future results.