潘興廣場 (PS) 2026 年第三季法說會：永續資本、AI 與投資組合展望

重點提要

• 潘興廣場 (Pershing Square) 在電話會議期間報告其計費資產管理規模 (AUM) 為 240 億美元，自 9 月底以來因投資績效表現成長 10 億美元。
• 管理層仍致力於永久資本 (Permanent Capital) 策略，並表示無意籌集開放式基金資本。長期 AUM 成長預計將主要來自基金績效與選擇性推出的新產品。
• 潘興廣場認為市場低估了超大規模雲端業者 (Hyperscaler) 的成長動能以及 AI 基礎設施的潛在報酬。管理層引述亞馬遜的雲端成長前景，以及微軟對下一季 Azure 成長率可能超過 50% 的預期。
• 該機構認為自動駕駛車 (AV) 對 Uber 而言是潛在助力而非結構性威脅。其預期自駕車供應將補充真人司機，並認為 Uber 的需求聚合與物流能力強化了其市場地位。
• 霍華德休斯 (Howard Hughes) 計劃透過向外部投資人出售特定資產 80% 至 90% 的股權，來減少投入房地產專案的資金，同時將更多資金轉向其保險業務。
• 潘興廣場特別指出愛爾康 (Alcon) 為一家優質的複利成長型企業，目前的交易估值為 17 倍本益比。管理層預期未來三至五年每股盈餘 (EPS) 年成長率將達到 15% 左右，藥物開發計畫則提供額外的潛在上行空間。

關鍵財務數據

業務與營運表現

永久資本策略

潘興廣場表示，其主要的價值驅動因素是計費 AUM 的成長。管理層預計最大的長期貢獻將來自投資績效的複利成長，而非持續的募資。

該機構不打算籌集開放式基金資本。新產品將在補充核心投資策略時選擇性推出。管理層表示，投資人不應預期會大幅擴展到數十檔基金。

Pershing Square Ventures 將利用現有的投資團隊來評估可能成為大型上市公司的未上市企業。該機構可能會在投資組合公司上市後繼續持有其股份，這使該投資工具不同於傳統的創投基金，後者通常會在鎖定期結束後分配或出售股票。

超大規模雲端業者與 AI 基礎設施

管理層表示，亞馬遜、微軟和 Meta 最近的營運績效強於市場定價所反映的預期。潘興廣場引述亞馬遜的說法，即其雲端營收在 2027 年和 2028 年可能會成長 40% 以上，以及微軟預計下一季 Azure 的成長率可能會超過 50%。

對於 AI 基礎設施，潘興廣場將密切觀察營收成長是否加速超越歷史水準，以及利潤率是否改善。這些指標將有助於確定高昂的資本支出是否正在產生有吸引力的報酬。

管理層主張，AI 資本支出要麼會產生足夠的營收和報酬，要麼企業將會縮減支出計劃。管理層認為，目前的市場模型更容易識別出更高的支出，而非該投資所產生的潛在營收。

Uber 與自動駕駛車

潘興廣場將自動駕駛計程車 (Robotaxi) 和其他自駕車視為 Uber 市場平台的補充。額外的供給可以減少等待時間和價格，而 Uber 對乘客、真人司機和自駕車提供商的整合，可以支援更高的車輛利用率。

管理層還指出了自駕車營運商必須解決的營運需求，包括清潔、車輛停放和歸還遺失物。據報導，Uber 每年處理約 7,000 萬件遺留在車內的物品。

據管理層透露，Uber 擁有超過 18 家自駕車合作夥伴關係。因此，潘興廣場預計市場不會僅限於特斯拉 (Tesla) 和 Waymo，並認為多家供應商可能會使用 Uber 的網路。

霍華德休斯資本配置

霍華德休斯計劃從幾乎全部由內部資助房地產股權轉向更輕資產的模式。該公司打算將特定資產 80% 至 90% 的股權出售給退休基金、家族辦公室和其他長期投資人，同時保留管理權和費率收入機會。

管理層預計這種結構將提高資本報酬率，並利用第三方資金支援更快的開發。從房地產釋放出的資金預計將投向保險業務，霍華德休斯的目標是實現 20% 以上的 ROE。

潘興廣場目前傾向於將新增資金投資於保險業務，而非回購霍華德休斯的股票。管理層表示，如果保險業務達到其報酬目標並且獲得超過兩倍股價淨值比的估值，那麼在保險業務中投資 1 美元，潛在可能支撐接近 2 美元的估值。

網飛 (Netflix)、愛爾康 (Alcon) 與布魯克菲爾德 (Brookfield)

潘興廣場認為網飛 (Netflix) 仍保有定價能力，因為相較於競爭服務，每訂閱美元的觀看時數依然具有優勢。管理層還指出，網飛第三季的客戶流失率同比有所改善。其認為該公司有空間在擴大訂閱定價和廣告業務的同時，限制對觀眾的干擾。

愛爾康 (Alcon) 被描述為一家表現可預測、品質極佳且擁有強大管理團隊的公司。潘興廣場預計未來三至五年，其 EPS 年成長率將至少達到 15% 左右。較小的藥物開發計畫可能會提供額外成長，儘管管理層將其視為可選擇的附加價值，而非基本預期的部分。

對於布魯克菲爾德 (Brookfield)，潘興廣場強調了該公司在房地產、基礎設施、電力和 AI 相關資產方面的長期優異紀錄。管理層表示，布魯克菲爾德總體上超出了在其年度股東大會上提出的多年目標。

管理層展望

• 根據潘興廣場引用的指引，亞馬遜的雲端業務營收在 2027 年和 2028 年可能會成長 40% 以上。
• 微軟指出，下一季 Azure 的成長率可能會超過 50%。
• 潘興廣場預計愛爾康在未來三至五年內，年 EPS 成長率至少達到 15% 左右。
• 潘興廣場預估布魯克菲爾德在未來三至五年內的 EPS 成長率約為 20%，低於布魯克菲爾德引用的內部預估值 24% 至 25%。
• 管理層預估出租 AI 算力產能的企業稅前報酬率為 15% 至 25%，而在超大規模雲端業者附加軟體和其他服務的情況下，報酬率有機會更高。
• 潘興廣場預計永久資本模式和投資績效將繼續成為計費 AUM 成長的主要驅動力。

風險與關注領域

• 在更高的資本支出轉化為持續的營收成長和更強勁的利潤率之前，AI 基礎設施的報酬仍具不確定性。
• 自動駕駛車的經濟效益取決於車隊成本、利用率以及管理營運物流的能力。一些主要的自駕車提供商也可能選擇不與 Uber 合作。
• 網飛 (Netflix) 的投資邏輯取決於內容品質、定價能力，以及避免過度投放廣告而導致客戶流失率上升。
• 愛爾康 (Alcon) 的藥物開發機會可能無法在商業上獲得成功，且並未包含在管理層的基本成長假設中。
• 解除房利美 (Fannie Mae) 與房地美 (Freddie Mac) 的託管狀態的時間與條件仍取決於政府決策。進一步的訴訟（包括可能上訴至最高法院）也充滿不確定性。
• 霍華德休斯 (Howard Hughes) 的保險策略取決於在維持強健資本和信譽的同時實現目標報酬。

問答環節重點

為什麼潘興廣場認為其部分投資組合仍被錯誤定價？
管理層將此差距部分歸因於短期類股輪動和資金流向。管理層主張，市場可能需要更多時間來認可季度的業務進展，特別是在大量投資於 AI 與雲端產能的超大規模雲端業者方面。

潘興廣場是否會在 Uber 或網飛成為更積極的股東？
該機構將自己描述為參與型的股東，定期與投資組合公司分享想法、建議和批評。目前其認為這兩家公司管理良好，無須採取公開的維權行動。

為什麼霍華德休斯沒有回購更多股票？
管理層認為，配置給保險業務的資金所創造的價值，可能高於以折價於每股淨資產價值 (NAV) 的價格回購股票。眼下的首要任務是建立保險資本、提升信譽，並透過第三方資金提高房地產報酬率。

潘興廣場持有本益比約 20 倍的公司，是否偏離了價值投資？
管理層反駁了較高本益比必然意味著較低安全邊際的觀點。管理層表示，持久的競爭優勢、定價能力和可預測的長期成長，比起單純低估值本益比能提供更大的保護。

衍生性商品如何在 PSUS 中使用？
潘興廣場主要使用遠期合約來管理監管集中度限制，並在完成所需申報之前取得經濟暴險。管理層表示，遠期合約並非旨在創造財務槓桿，應被視為在經濟層面上等同於直接持有股份。

潘興廣場是否會在美國境外進行投資？
管理層對國際投資仍持開放態度，但由於市場流動性、公司品質以及與管理層溝通較為容易，因此偏好美國。管理層表示，美國境外若有足夠吸引力的企業，仍有可能符合條件。

SPARC 的前景如何？
潘興廣場繼續尋找可以按可接受條件上市的私營公司。管理層表示，市場波動、不確定性以及 IPO 失敗案例可能會使 SPARC 的執行確定性更具吸引力，但目前尚未宣布任何交易。

電話會議全文紀錄

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完整財報電話會議逐字稿

管理層陳述

Operator

Hello, and welcome to Pershing Square's Third Quarter Earnings Q&A.

I will now turn the call over to Pershing Square's CEO, Bill Ackman; and CIO, Ryan Israel.

William Ackman

Thank you for joining. So just a few instructions on how to ask a question. If you'd like to ask a question over the phone. The dial-in details are in my pin post on X and in the Events section of the Pershing Square, Inc. website. If you've already joined by phone, you press star 1 to join the question queue. We will only accept questions from those who recorded their name while joining. If you're dialed in but didn't record your name, you can do so now by pressing star 0 and speaking to a member of the support team. Please listen carefully as the operator will announce your name prior to unmuting your line. You can also respond to my pin post on X with your question, and we'll do our best to answer as many of them as we can over the course of the next hour.

With that, Fran, why don't you start with a question we received on X?

Francis McGill

Sure. So [ TheBullishBrokeGuy ] writes, love that the Q&A is open to all. Most funds behind the earnings script like it's witness protection. My question is what in the Q3 numbers would you say the market is still pricing wrong? And what -- why hasn't that closed yet?

William Ackman

In the Q3 numbers for Pershing Square, Inc.? For the portfolio of companies, I think, is what it's referring. I'll hand it over to Ryan. Why is the market misvaluing all the stocks we own?

Ryan Israel

Yes. So I think that when I look at the share price performance in response to the earnings that have come in across our portfolio over the last couple of weeks, at the highest level, I would say, well, there's definitely been some very strong performance. So for example, I would say, Visa and Mastercard have done incredibly well since earnings, which I think is an appropriate response to how great these businesses are and how well the businesses have grown and how strong the earnings are.

I think across the hyperscalers, whether you think about be it Meta or Amazon or Microsoft, these are businesses that have performed a lot better than expectations. For example, Amazon actually guided that they thought that their revenues could grow 40% plus in 2027, 2028 for the next several years in their cloud business. They are the first company to have given any guidance at all in terms of multiyear, specifically like that of the large hyperscalers. And we did a lot of work in the letter where we talked about what we thought the opportunity was, and that's really a validation of the work that we have done.

While they had a nice response yesterday, I would say the initial reaction was the stock was slightly down after that. And so that is kind of a theme across the portfolio. You can make a similar argument for Microsoft where they really have been growing incredibly well. They talked about how next quarters Azure growth, which is their cloud business, could actually be above 50%. I mean these are some of the largest growth levels at scale the company's cloud businesses have ever reported, and yet the stocks were unable to actually -- or did not increase in the next day.

And so I think the market is just sort of missing the opportunity that's really right in front of our eyes with respect to the hyperscaler companies and the cloud businesses, where the results were nothing short of phenomenal, in our opinion. Yet in aggregate, the companies are actually slightly down since reporting what I think a lot of people thought were phenomenal earnings.

William Ackman

The other thing I think is going on in markets is there's just huge short-term capital flows based on various forms of sector rotation. And depending upon whose capital is being withdrawn or funds that are winding up, I think actually, despite the real-time nature of markets and the greater liquidity, I think it takes actually time for the market to recognize business progress in the quarter. I wouldn't judge the trading of the stock in the day and a few days after earnings as kind of the metric as to how the stock is really going to respond to the new news.

Go ahead, Fran. Next question.

Francis McGill

Okay. Great. We had several questions about Netflix and Uber from MasterGroupOfFunds, [ Rich Zheng ], [ Joseph Duff ] and others, asking whether we would ever take more active roles in companies such as Netflix and Uber, whether on the board or in discussions with management. And then further on Uber, if you can talk a little bit about your market concern -- the market concerns around robotaxi competition and other AVs. Does that cause you to revisit your conviction at all?

William Ackman

So we are very much a -- I would describe us as an engaged shareholder. While we haven't had to be a public activist in, I would say, for quite a long time, approaching a decade, we do engage with pretty much all of our companies on a pretty regular basis. And we're not shy about sharing ideas or advice or input or even criticism.

We do think Uber is an exceptionally well-run company. We think the same about Netflix. If we have good ideas for them, we're going to share them, and we do. Ryan, why don't you speak to -- we did address in our previous call, but I'm not sure that everyone on this call is on that call, kind of the Uber -- our Uber thesis, and how do we assess the risk of robotaxis and...

Ryan Israel

Sure. At a very high level, we actually think the opportunity from robotaxis or AVs is actually larger and a positive for Uber, more than anything. The reason why we think that is when you look at sort of how Uber's business model works and what riders ultimately care about, which is we think the right way to analyze how the future will evolve, having a lot of supply of rides, whether it's human drivers or whether it's AVs, is really important because what that does is it allows users to get rides more quickly, which they care a lot about and, ultimately, the increased supply for a given level of demand will result in lower prices.

And so by having the aggregation of supply and demand on Uber's app for all of the customers they serve and all the drivers that they currently have, Uber provides the best marketplace for that. So even if Tesla or Waymo, which are kind of the 2 primary AV providers today, were able to increase the size of their fleet or their cars orders of magnitude, they would still not come even close to offering the amount of supply that they have.

There's also additional concerns about how they would be able to handle a lot of logistical things. How do you clean cars? How do you store cars? How do you return items to people that are lost? I think Uber had mentioned at one point last year like 70 million items get left in an Uber, and somebody's got to return that, every single year. And so that's really important to have that logistical element and have a human running ultimately how the cars drive.

And so I think that, ultimately, what we see is that it will be complementary. There are peaks and valleys in Uber's business in terms of when people take rides, some popular times or Friday and Saturday night or during the workday, during the middle of the week, random times, utilization is low. AVs can be really helpful in filling out those peaks. I think it's going to be very difficult to either have the supply of AVs that you need to meet all the demand.

And because these AVs are still quite expensive to build and will likely be so for the foreseeable future, you will really need to have high utilization. So partnering with a company that can ensure the utilization or the use of your vehicle stays very high at all times is going to be the right way to earn attractive return on capital.

What I would point out for as much as people are concerned about particular AV players like Tesla and Waymo, is Uber actually has over 1.5 dozen partnerships with other companies that have been quite successful. So it's not as if, ultimately, we think AVs will be dominated by just 2 companies. We see that there will be a number of AV providers, most of whom are likely going to work with or already are working with Uber. And I think that further allows for Uber to be in a strong position, which is you may have 1 or 2 players that decide long term not to work with it. But if everybody else decides to work with Uber, I think you'll have enough of these positive supplies of AVs on the network, and that will create those positive network effects that result in low wait times and lower prices. And that will ultimately inure to Uber's benefit and Uber's customers benefit.

Francis McGill

Right. We have a few questions over the phone in queue. So perhaps, operator, would you tend over the first question?

Operator

Our first question comes from the line of [ Hassan Cobb ].

Unknown Attendee

Yes. I'm happy to be here. Yes, I'm a retail investor and shareholder of both Pershing Square and Howard Hughes. I just have a quick question. As you look to grow your investor base over the next 5 to 10 years, how are you thinking about reaching newer and more diverse groups of retail investors? And are you open to any ideas?

William Ackman

Well, we're certainly open to ideas. But among the ways we hope to achieve that is by being an accessible management team, having calls like this one where anyone can get in the queue and ask their question. And we think investor recruitment, if you will, or just -- you can't just go public. You need to tell the world that you exist. So I've been making an effort. I've been on the podcast circuit over the last few weeks and done a reasonable number of podcasts to reach different kinds of audiences to create a little more visibility around Pershing Square. But we have an investor relations function that's led by Jill. We have investor relations function for the funds that we manage that is led by [ Tony Asnes ].

And one of the things about -- I think we're very well known as an investment firm. People know who we are. But a lot of people don't know that you can actually buy Pershing Square as a stock or buy Pershing Square USA, the fund, or what the changes that Howard Hughes is making, the transformation it's making to its business model. And we're going to pound the pavement a bit on that and our investors can be helpful as well.

So please post on X if you like what we're doing, let the world know we exist, and we're open to any and all ideas from our shareholders.

Operator

Your next question comes from the line of John.

Unknown Attendee

I'd like to start off by wishing Bill and his family a speedy recovery on behalf -- health and recovery on behalf of his daughter. Second of all, so a loaded question, it's in regards to 2 of your holdings, Fannie and Freddie, it's a bit of a loaded question. I'll start off by your recent listing on the Mexican Stock Exchange and your IPO. Will Pershing Square exceed its 10% holdings in those 2 entities?

Second part of the question is with an Executive Order that was signed approximately a little bit more than 6 months ago, Director Pulte, when will he be visiting the ERCF as far as those 2 are concerned? Third part of the question, with the [ onbound ] ruling not to rehear the trial, do you feel in your opinion that this administration will forego all further legal proceedings or appeal to the Supreme Court for this last stage of this battle, we'll call it?

And the fourth part is the -- with tonight's midterms, should the Democratic Party regain, whatever, the House, Senate, do you feel it's going to ignite a bit of a spark under this administration to expedite the process of uplifting and relisting, and removing out of conservatorship?

William Ackman

Okay. Thank you for a very comprehensive question set. So I think what you're asking, we do own approximately a little over 10% of -- or about 10% of both companies. We almost think of it as one position. We've got a little over 200 million shares of stock. So yes, we're a meaningful owner obviously.

With respect to the capital rule and setting these entities ultimately to be released from conservatorship, obviously, it's up to the President. But the point we made in the letter that we sent to shareholders is this is not just an economic imperative, in our view, where a lot of value can be created for the American people. It's really a political imperative on the part of the Republican Party not to hand these now extremely well-capitalized, highly profitable entities, which have the potential to be used as a very powerful political tool. Your ability to make adjustments to housing policy, mortgages terms, the nature of underwriting, the kind of risk you take on, in conservatorship, the government has god-like powers.

And I think, I'm aware, we all should be that, obviously, the Republican Party does not want to hand that control, if you will. We can't be assured that the next President is going to be a member the Republican Party. And so I think there's definitely political reasons why Fannie and Freddie need to be released from conservatorship, which means at some point past today, the -- we've heard from the Treasury Secretary that this is -- the ownership, as he called it, of Fannie and Freddie is something that needs to be resolved in the 2027, 2028 years, and that's why -- that's because it has to happen before the President comes out of office.

With respect to the litigation, the shareholder litigation that was won by shareholders and the government keeps appealing, I don't know if there will be an appeal to the Supreme Court or not, unfortunately, it's not as large a recovery as it should be. Our view here was this was one of the worst economic takings in the history of the country, and it's nice to have some reward for shareholders. And actually, I wouldn't mind it going to the Supreme Court because I think the Supreme Court might attract more attention to how inappropriate and unfair this was.

With respect to change in the House and Senate, the expectation clearly is that the control of both houses are going to no longer be in -- at least one will no longer be in the hands of the Republican Party, which means that the presence hands will be tied on a lot of policy issues that require the approval of the Congress. This, fortunately, the resolution of Fannie and Freddie is one remaining massive piece of economic policy that is unresolved. It's an opportunity for the President to ring the bell at the New York Stock Exchange and literally deliver hundreds of billions of dollars of value to taxpayers. I think we're being conservative in estimating there's $0.5 trillion of value here, 80% of which is held by taxpayers. So it's a big opportunity.

Politically, it's something great for the President's legacy. It will be the greatest real estate deal of all time. And also he'll be -- will be one of the few things he can actually get done. So we're, I would say, optimistic that this gets resolved, and hopefully sooner rather than later.

Let's go to the next question, please?

Francis McGill

Great. [Operator Instructions] Taking some questions from X. We had a handful about Howard Hughes and the capital allocation strategy there, how capital is being allocated to Vantage as opposed to Howard Hughes communities. Or also, would Howard Hughes consider a buyback given the discount to which it currently trades? How do you think about that?

William Ackman

Sure. So we think the higher -- we can create the most value at Howard Hughes by taking capital out of the real estate subsidiary and injecting that capital into the insurance operation. The approach to taking capital out of the insurance sub is basically to bring in -- most real estate investors borrow money from a financial institution. The general partner puts up a relatively small amount of capital. In some cases, they raise that GP capital from others. And then they bring in limited partners, investors who cut up the bulk of the capital on a real estate transaction. It's a highly structured way to invest.

Howard Hughes has taken almost an old-fashioned approach. It's borrowed money on a very conservative basis and put up effectively 100% of the equity, pretty much every transaction it's ever done. The problem with that approach is that the return -- the after-tax return on equity, again, Howard Hughes is a C-Corp, is at a level that's difficult -- it's difficult to overcome, I would say, the market's cost of capital for that business.

So the plan is we've hired -- within days of hiring financial adviser on a broader basis, but there's already transactions underway, where we're going to sell down 80%, 90% stakes in the equity interest in a bunch of assets, bring in kind of long-term pension funds, family offices, other investors who want to earn attractive real estate returns, generate fee income from those arrangements, including incentive fee income, really convert -- transform the business into a, think real estate asset management firm, like Blackstone's kind of core real estate and other operations. So we think that's going to improve -- materially improve Howard Hughes' return on capital.

We think it also will enable -- there are -- because the cost of capital for Howard Hughes historically has been so high, and there have been development opportunities that are great real estate developments financed in the conventional way that real estate investors finance investments, that are hard to overcome public company cost of capital, we're not going to have that problem anymore. So we think we can accelerate some of the development at Howard Hughes and just use more of other people's capital and build a higher returning business.

So that's great for Howard Hughes. And we have a management team on the liability side of the balance sheet for our insurance operation that has the capability to run a much larger insurer and see interesting places to deploy capital. And then we have Pershing Square on the asset side of the Vantage where we think we can earn meaningful returns on capital.

Stock buyback here we do not think will generate materially. The most important thing for Howard Hughes is to -- for the world to take -- be able to look at the company and say, this is an insurance holding company. The insurance operation's led by Mark and David, the investment's managed by Pershing Square, and we build a high ROE insurance company. And that will take the stock from, in our view, something approaching $80 to twice our intrinsic liquidation. Ryan, you want to jump in?

Ryan Israel

Yes. And I think on the buyback in particular, adding to Bill's comments, the way we think about it is where is the best use of every incremental dollar of capital. So we clearly evaluate buybacks. And as we talked about publicly with Howard Hughes in some of our presentations, we think that kind of the intrinsic value of the business is worth -- or the NAV is something in the low $100s. And the stock is trading for just a little under $80. So you could argue that by buying back stock, you might be creating, every $1 is kind of worth $1.25 or $1.30, something of that order of magnitude.

We believe taking $1 and putting in the insurance business, we can achieve our aspirations of a 20-plus percent return on equity. Public insurance companies like that trade north of 2x book value. So we think in effect, by putting the $1 of capital in the insurance business, that dollar could be or something closer to $2. In our view, that is a much higher return on capital for that, just to give you a little bit more context to how we think about it.

William Ackman

Yes. You put $1 in, you can compound at 20% and then be worth 2x a year from now, $1 becomes $2.4. And then, of course, insurance is a credit-sensitive business and having strong credit ratings and that insurance operation are important. If anything, we want to build the capital base of Howard Hughes to improve our creditworthiness as opposed to shrink the capital base. Maybe someday that will make sense. But in the short to intermediate term, the focus is really going to be on driving the capital and returns in the insurance operation, as well as reducing the capital but increasing the returns in the real estate operation.

Francis McGill

Operator, let's go to questions from the phone, please.

Operator

Your next question comes from the line of [ Karim Asif ] with Bank of America.

分析師問答

Unknown Analyst

So I think like about 96% or 98% of your fee-paying AUM is permanent today. Do you expect that to take that share to take hold as you add more retail products? Or could you take on some redeemable capital to grow faster?

William Ackman

Yes. We're not interested in raising open-ended fund capital. The model here is -- the beauty of this strategy is we're not on a fundraising treadmill. Our focus can be on the underlying performance of the companies we invest in. We can grow this business at a very high rate just with the compounding of the various funds that we manage. So our focus really is on permanent capital model.

Francis McGill

Okay. Great. [Operator Instructions] We have a couple of portfolio questions from the online portal. Coming from [ Youssef ], he has questions about Netflix and Alcon. Let's start with Netflix. Competition in advertising -- with competition in advertising, Netflix has raised subscription prices considerably. Competition from Disney, Amazon Prime and Hulu continues to grow. Personally, I found their content increasingly inconsistent at Netflix. How confident are you in the long-term pricing power? And could you -- and could expanding advertising risk frustrating viewers and pushing them towards the competition?

William Ackman

Just a high level, today, you can -- the advertising fee on Netflix are $20 a month. The amount of content someone receives for $20 is really -- this is one of the -- we like companies which don't, I would say, squeeze every dollar of potential profit from the consumer when they're delivering their product. And I think there's a vast difference between the incredible volume and quality of content you can get at Netflix for a month. And by the way, if you don't want to pay $20 a month, you can pay $8 or $9 a month and get an advertising-supported subscription, and the ads are, certainly, on my experience, compared to other websites, they're actually decent ads and they're not nearly annoying. I think Netflix has been very cautious about overwhelming people with advertising. So we think both on the advertising side and the pricing side, they've got plenty of room.

Now of course, content quality is really important. I think they've felt, based on -- certainly, you can you can draw an inference from the changes they've made in the leadership of the content part of the business, that they want to continue to be at the cutting-edge.

Ryan Israel

Yes. I think that's great. Just a little extra context. So one of the things important in the way that we evaluate sort of the pricing for Netflix is we look at what is the pricing per hour that somebody might play to Netflix versus other services? And Netflix is still much cheaper per hour than any of the competitive services out there, for the main reason that most of the services, generally, the top ones, are all priced around the same level. Some of the ones that are trying to gain more shares, starting off a small base are priced much lower. But people spend significantly more time on Netflix than they do on any of the other subscription services. And so as a result, it's better value for people. And that's a key metric that we track.

One thing that the company talked about on its third quarter earnings that we thought is very important on these proof points, most of these concerns, which you bring up, [ Youssef], and that we've certainly studied, they really relate to the U.S. business. A lot of Netflix's business is outside of the U.S., and they really don't have any of these significant concerns outside, it's really U.S. focused. And one of the things that company talked about is their churn, which is really the percentage of people who connect, which is industry-leading, actually improved. So there were fewer people canceling these services as a percentage of their customers this quarter than there was in the quarter and the prior year.

And we think that's ultimately sort of the real truth point, is whether or not the company is having fewer people disconnect from the services. And so we think that that was a really great indication that the company shared on the third quarter earnings that things are going well, despite a lot of media talk about whether people are not watching as much Netflix as they might have in past. We still think it's a very good value and that fewer customers are disconnecting, which is really important for the health of the business.

Francis McGill

Great. And the second question from [ Youssef ] about the portfolio relates to Alcon. I've researched Alcon and find it particularly interesting, a very high-quality business. Was the investment primarily driven by an attractive valuation for a reliable long-term compounder? Or do you anticipate significant growth catalysts that the market is currently underestimating?

Ryan Israel

So I think what's interesting about Alcon is really highlights our process overall for -- we have this library of maybe 300 to 400 companies that we think are the world's kind of great businesses. And we studied them for long periods of time. Alcon was one, when it spun out from Novartis and was preparing the spin back in late 2019, where we really started taking a look at it knowing that it's going to become a publicly traded company. And we had a price target for it. We thought we might get the opportunity. And then it actually spun out of the valuation that was a little bit higher than kind of our thresholds for value.

For perspective, Alcon, really going back almost 7 years now, 6 to 7 years, was trading at a high 20s multiple of earnings for a business that we thought was a high-quality compounder, as you pointed out. That valuation today is now 17x. But we think the company has actually done a wonderful job. And so it's a very interesting situation where we followed a company for a long period of time, it's had enormous success in terms of its business progress, and yet the market, I would say, has soured more on the entire sector, the European medtech sector, even though Alcon's really a U.S. company. And I think that has been what's resulted in a significant multiple compression that gave us the opportunity to buy the business.

So to your question, we do think that it is a high-quality compounder that meets our threshold for a high degree of predictability and certainty, a very good management team, a business that we think can grow, at least at mid-teens earnings per share per year over the next 3 to 5 years at a very low valuation of 17x earnings. We also think that there are some interesting yet smaller parts of the business, particularly as it relates to some of the small drug development they're doing, that have the potential to be quite blockbuster drugs, if you will, for Alcon in terms of its various parts of the eyes.

We'll have to see if that plays out or not, but those are some interesting call options, I would say, on the business that I think the market is ascribing very little value to. They're not in sort of the figures I gave you, but they could be very additive to that in terms of the growth rates. Those things ultimately hit and become very successful. So I would say a mixture of both.

Francis McGill

Great. We'll now take a question from [ Sebastian Gould ], who asks, given the expanding scope of the mandate at Pershing Square, adding Ventures, asymmetric and other funds in the future, how are you thinking about a potential change in the team size? And is there an expectation that those investments that may make it into Pershing Square Ventures might remain in the portfolio once they go?

William Ackman

Yes, very thoughtful question. So the good news is with 9 people in the investment team, including me, and a portfolio of, today, let's say, 14 companies, I would say the ratio of investment team talent to deploy -- capital deployed and ideas, is one of the highest ratios of any investment firm in the world. So we have a team that has enormous capacity.

Ventures is a space that personally I spent a chunk of time on over the years. And it's something now that the full team is available to look at ideas. And the same kinds of themes and business constructs that we experienced in the public markets, we're looking for companies that will become a great public companies. So we actually -- we don't need a different team to assess really private businesses. I don't expect any change in the team by virtue of launching Pershing Square Ventures.

With respect to asymmetric, this is stuff that we do every day. So this would just be a dedicated vehicle that would hive off, if you will, a portion of the portfolio. So there's really no change in the team there. So I think our business really will not change as a result of the launch of these 2 funds.

Ryan Israel

And just one thing to add in terms of the team, particularly for PSV, a lot of the diligence increasingly in the public markets, if you think about the hyperscalers, think about the AI landscape. In order to be a great public market investor, we think it's increasingly important to study private companies. That really gives you a lot of foresight into what's coming around the corner, if you will, is having a really good understanding, being able to meet with these companies, being able to understand their business plans, and then being able to ultimately take those learnings, apply them to public markets, I think it's something that's really done very well with the same team that's looking at a lot of those public market investments. We view it as very complementary and actually making us better public markets investors as well.

William Ackman

Yes, and to your question about, will we continue to hold these companies after they go public, we'll become long-term owners, one of the things that's appealing, in my view, to founders about Pershing Square Ventures as an investor, is it's not a traditional venture capital fund. And most venture capital funds today, after the business goes public after the lockup is over, the stock has distributed out to the underlying investors in the fund or they sell the sort of -- they sell the stock. We can choose to retain the stock for the very long term. We are very comfortable, obviously, in the public markets. So part of our pitch is we're a great investor in the private world, we can help you with the process of going public, and we can be a long-term investor after your public. So we think this is -- we'll be a very good partner to a high-growth private company.

Francis McGill

Great. The next question comes from [ Ludwig ], who asks, why is Howard Hughes not part of the PSUS portfolio? I'm looking to buy PSUS because I prefer the fee, but it seems like a big loss for shareholders to not get a piece of that company.

William Ackman

So I think Howard Hughes will be an excellent investment over time. The issue is we own 47% of the company. And as part of the transaction we did with the company, it was important to the Board that we didn't formally take control of the company by owning more than more than 47%. So we have a restriction on our ability to acquire additional shares in Howard Hughes, which is why it's not in the PSUS portfolio, but of course, any investor can just buy the stock directly.

Francis McGill

Great. Our next question comes from [ Ator ] who writes online asking about Brookfield. He'd like for you to comment a bit about the thesis behind the company and how you assess management's historical delivery against its targets, particularly in real estate insurance.

William Ackman

So we like the asset management business, and we like asset management businesses where the company has like, I would say, a real competitive advantage in the strategies they pursue. Brookfield has a very long-term track record at being a superb investor in real estate and infrastructure, in power. And actually a lot of the AI adjacent, data center adjacent businesses, we've known the management team for many years, almost -- really going back almost 20 years. So it's a team we have enormous confidence, and they've generally done a very good job meeting their objectives. But Ryan, do you want to comment?

Ryan Israel

Yes. So I think it's a great question about how do you evaluate them relative to their historical objectives. Most companies that we look at, while they do a great job over time, they don't actually give a clear road map at every step of the way of what they're going to do next. So it's a little bit harder sometimes to assess. The business performance is great, but how do we think about it relative to what management said that they would do?

Brookfield is very unique in that every single year, they have a shareholder meeting where they tell you what they're going to do in their view over the next 4 to 5 years. And then the next year, they update you as to what they've done over the prior year and they update what their outlook is for the following 4 or 5 years. So I would say, of all the companies we track, it's actually probably the easiest one in order to evaluate what management has done.

It's been a very clear trend. Management has outperformed their targets at really every step of the way, that is despite having what I would view as pretty ambitious target. So for example, we think that, in our estimates, Brookfield is likely to grow its earnings per share over the next 3 to 5 years something around 20%. Brookfield's own internal estimates, as we talked about in the letter, are closer to 24% to 25%. And given their track record, it would be very reasonable, I think, for one to assume that Brookfield's numbers may be a little bit more accurate than our numbers. And so if it that actually happens, I think there'll be upside even beyond what we think that Brookfield can do. And the management team, as Bill mentioned, is excellent and has done a really impressive job over time.

Francis McGill

Okay. Great. In the letter you wrote about maintenance CapEx and growth CapEx for AI infrastructure. How do you think about looking for evidence that would show whether the new capacity is earning attractive returns after the equipment has been installed or replaced down the line?

Ryan Israel

Sure. So in the letter, the point that we were trying to make at a very high level is it's clearly observable that these companies are spending significant amounts of extra capital. And what's interesting about the AI build-out, I think, versus lots of other industries in which you might have a significant increase in CapEx, is here, you can actually tell exactly where it's going. And the reason that you can do that is they are ultimately first constructing a data center shell, if you will, or just the physical infrastructure. And then that will take them sometimes a year or 2 in order to complete. And then towards the very tail end of that progress, say, maybe 3 to 6 months out, they actually have to acquire or install what we call the server equipment, which really includes the GPUs primarily, but also all the other networking equipment and everything you need in order to set up the data center so that you're able to monetize it.

That clearly allows us to better track what they're spending the money on. And then ultimately, the question is, how do we evaluate whether that return on capital is an appropriate one or not? And the way that we think about it is in order to earn an attractive return on capital, and we gave a little example of this in the letter, we need to see revenue growth accelerate beyond historical levels. If revenue growth is able to accelerate beyond historical levels, we can then look at how profit margins change over time and make an assumption about the profit per dollar of CapEx that is ultimately coming back.

And we wrote about this a little bit more in the letter, but we think based on our analysis, which involves looking at what the companies have said, talking to a lot of experts in the space about how data centers get constructed and ultimately what the return should be, looking at some pure-play competitors who are already doing this where it's a little bit clearer to see what the stand-alone P&L is, our expectation pretty conservatively is that a return on capital pretax of 15% to 25% would be what most companies who are just renting out compute capacity could do. We think for our hyperscalers, Amazon, Microsoft, even increasingly, Meta, over time, they're going to have a lot of value-added services that they could provide on top of just renting out compute because they're able to be able to layer effectively in software that will allow people to do more things with that compute. And that value add should allow them to have even higher returns on capital.

And so the way to ultimately measure it will be to look at what the revenue growth is over time in aggregate, and want to see an acceleration of revenue growth. And then likely also going to want to see an acceleration and profit margins. And so those are kind of the 2 key determinants that we would be looking for outside-in to see whether or not the returns on capital are likely attractive in these projects, which we think they will be.

William Ackman

One of the other things we pointed out in the letter, which I think is interesting, is that analysts have modeled the acceleration in CapEx spend. They really have not given credit for the returns that are going to be earned on that CapEx spend. Analysts generally feel more comfortable building into the model things that they know for -- with a high degree of certainty, and they're much less cautious about building into the model things that -- on which they're not -- don't have as much certainty. And obviously, return on the construction of data center several years out is something that's a little more uncertain.

But 1 of 2 things has to be true. Either the CapEx is earning an attractive return, which means revenues will grow at a rapid rate, or the return objectives are not met, and therefore, the CapEx budgets get cut. It seems like the stocks today, or at least the models are being built as if it's a certainty the CapEx is spent, and it's an uncertainty the revenues are going to come in. And that's just not, we think, the right way to look at the business.

Francis McGill

Okay. Great. Our next question comes in response to Bill's Twitter post, from [ Arda ]. And he says, to someone who's been following you for a long time, your style seems to have moved from more traditional value investing in great businesses -- excuse me, 2 great businesses, like Meta and Netflix, at about 20x earnings. I'm aware that these are also great companies, but it feels like you're asking for less margin of safety. Has your style actually shifted? And how do you find margin of safety at these valuations and manage risk?

William Ackman

I think the margin safety can be meaningfully greater. There's not necessarily a correlation between a higher multiple and a lower margin of safety, right? There are plenty of low-multiple businesses that are poor-quality businesses that are going to disappear over time, and there's no margin of safety at all. So it's not just a pure statistical analysis, the higher the multiple, the lower the margin of safety.

I mean I think Meta's margin of safety comes from the billions of people who use their products, that distribution channel. They can launch Muse, very high returns. They earn in their core business, the stickiness of people who use their products. These are really important moats that make it very difficult to compete with a company like Meta. Or Visa. Visa today at mid-20s earnings, I think there's an enormous moat around the business, and therefore, there's a meaningful margin of safety.

The value of a financial asset is the present value of the cash it generates over time. And growth is -- if you can be the business is one where you can have a high confidence level in the growth that's going to occur over time, that growth, present value today, should add to your margin safety.

Ryan Israel

And one thing I would just add to that, agreeing with Bill's commentary, is that the characteristics of the businesses that we own today, those have always been the characteristics of businesses that we wanted to own by and large. One thing that has changed recently in the capital markets is that these wonderful businesses have come down significantly in terms of either of their share prices, or more likely, because their earnings have grown significantly given their multiples.

And so when you look across our portfolio, most of what we are buying, even though the aggregate portfolio multiple is about 20x, the companies themselves are trading at significant discounts relative to the multiples they have traded at historically. And I would argue that's despite having probably better business prospects today and higher competitive moats today than they've had previously. And so I think part of this is just trying to take full advantage of what the opportunities are that we think the market is offering us, that historically would have been too difficult to have acquired these companies at much higher multiples where they typically traded at.

William Ackman

The other point I would make is inflation is a threat to many businesses. And one of the things that creates a margin of safety with a great company is their ability to -- is pricing power, their ability to raise prices in a world in which inflation is -- turns out to be persistent. So don't -- your protection comes from -- doesn't come from a cheap multiple. It comes from a great business.

Francis McGill

Okay. Great. We had several questions on the use of derivatives from, Daniel, Nicholas M. and [ Adam Funk ], the questions essentially ask, can you explain how Pershing Square uses derivatives? Why PSUS holds forward? And how investors should think about the reported values of the positions in that context?

William Ackman

Sure. So there are regulatory requirements for [ Fortiac ] funds that limit -- so for half the portfolio, you can invest as much as 25% of assets in any one name. So that's a degree of concentration that certainly covers what we do. For the other half of the portfolio, at cost, there are limitations on buying more than -- deploying more than 5% of the fund's capital in any one name. And there are technical rules around those acquisitions that could cause you to trip the 5% threshold. And one of the ways in which we use derivatives is to make sure we don't inadvertently trip those thresholds in building positions.

But we don't use forward as a way to generate financial leverage. We think of that position as a direct equity ownership. And as soon as we can turn the forward contract into an equity interest, we do so. The other reason why we use forwards is that the Hart-Scott-Rodino requirements for investors who are, other than entirely passive, requires sometimes that we make a filing with regulators before we have beneficial ownership of the stock. And so we'll use a forward contract as a way to kind of get economic exposure before we ultimately meet the regulatory requirements on the securities.

Since we've purchased a bunch of new investments over the last -- since the launch of Pershing Square USA, you've seen more forward contracts than we will use once those positions are held for more than probably a few months. But it's not something that should -- you should just think about a forward contract as the economic equivalent as if we own the shares.

Francis McGill

Great. The next question comes from [ ValueIsImportant ] who asks, hi, Bill, I'd like to ask if Pershing Square has any interest in investing in Hong Kong in tech stocks. And I would broaden this to say, several investors have asked whether Pershing Square would invest outside of the U.S. more broadly. If you could comment on that.

William Ackman

So yes, we would invest outside of the U.S., I would say, more likely investor in countries that are closer to the U.S. where English is spoken. We've invested in Canada over time. We've invested occasionally -- Universal Music is a European domiciled company with its principal headquarters in the U.S. But our focus on, while the vast majority of the portfolio over time has been U.S.-focused really relates to a combination of many of the best businesses happen to be headquartered here, listed here and have market caps that enable us to build positions in a relatively short period of time. And if there's an issue or we want to be more engaged in the company, it's just obviously much easier to do so if we don't have to have a passport and make it through customs or travel long distances in order to engage with the management team. So our bias is related to the U.S. That being said, occasionally, a business will meet our standards, will be sufficiently compelling, that we'll step outside of the U.S.

Francis McGill

Great. We have questions from Adam and from the silent investor along with a few others about SPARC, asking if there is any update that you can provide, or how you think about that over the long term?

William Ackman

So SPARC, Pershing Square SPARC Holdings, is an acquisition company. We call it a SPARC because it's -- instead of using the traditional SPAC approach, what we did here is we gave what were initially nontransferable rights to the investors who invested with us in our previous backed Pershing Square [ Tontine ] Holdings.

The beauty of this entity is there's no founder stock, no shareholder warrants. Their underwriting fees, there are actually no -- we take no compensation in connection with this vehicle. The only differential security the funds own here is these warrants on up to 5% of the outstanding shares of a company that we were to take public.

We have engaged with private equity funds, some founders and others over time about the business, or about this entity, this vehicle as a way to go public. The lines have not yet crossed on a company we want to take public on terms that make sense to take it public. Now that public markets, there's been a huge amount of companies that have been funded in the private venture markets, the IPO market is open really episodically. And this year is kind of a good example. There have been some pulled IPOs of very notable companies, [ Oreing ] and others, this year, and we can really offer a certain execution to those businesses.

So there will come a day, and hopefully sooner rather than later, we find a business we really like on terms that make sense to us as the sponsor of the entity where we take a company public and we give them the certainty of a lifting on terms that make sense. And I think the market environment is actually well positioned with uncertainty and volatility, interest rates and some failed IPOs, for us to get something done here. So it's definitely on our list of things to do. And I hope that we get something done sooner rather than later.

Francis McGill

Great. Just a couple more questions. You addressed this at the beginning of the call, but we've had a number of folks right in about the discount at which U.S. trades and how you think about it and some of the initiatives that you have undertaken to start to address it?

William Ackman

So it's definitely something we're focused on. One of the things that we're going to examine carefully is whether some of the funds that trade well actually pay dividends. And so we're going to take a close look at that as we think adding a yield to this vehicle where you get the benefit of Pershing Square's performance over time and a current yield along the way. We'll make this -- we'll open up the universe of people who will be able to own this entity. So that's something we're going to study.

Francis McGill

Okay. Great. And this question comes from [ FredericJusticeOnline ]. As you think about launching new products to grow fees, how do you protect against the simplicity of the permanent capital base? And does adding complexity start to dilute the core advantages rather than compounding?

William Ackman

I missed a little bit about the first part of the question, just say one more time?

Francis McGill

Sure. They're asking how you weigh the launching of new products, of new funds, essentially.

William Ackman

Yes. The core driver of the value of Pershing Square, Inc., the manager, the alternative investment manager, is the growth in our fee-paying assets under management. The biggest long-term driver of our fee-paying assets under management will be the underlying performance of the funds that we manage. We are fortunate in having a high return investment strategy. We have, as of this moment, $24 billion of fee-paying assets, up $1 billion from the end of September just from performance, as if we raised a new $1 billion plus fund. The effort associated with that is much greater than just the compounding of the underlying assets.

So our first focus, and importantly, we're in the business of generating returns for our investors. So it's a great model when our interests are perfectly aligned with our investors. We'll do better if our performance is better, even if we never raise another dollar of capital. So that's our first and very much focused priority.

Beyond that, if there are funds that we can launch that we have a capability and the acumen and relationships and whatever is required to launch a new fund, and we think it's additive strategically to the firm, we're going to do so. And what we like about Pershing Square Ventures, it's a space we spent time on historically, bringing the full team to focus on -- the biggest risk to investors always is disruption. Someone will come along with a business that disrupts a company that you own. The best way to understand what's coming is to pay attention to basically venture-backed businesses. And this will -- just the launch of the vehicle will make us systematically look at really all the interesting product companies that are potential threats to existing public companies and potential opportunities for investment.

And it's a very -- and it's also a way for us to grow that really largely unrelated to the other strategies, but complementary to the overall business. So we'll launch vehicles like that. But don't expect for us to have 20 new funds in 5 years or anything like that. It's going to be a handful.

Francis McGill

Okay. Great. At this time, we have no further questions over the phone, and we have addressed all of the topic areas from folks who have written in on Twitter and online.

William Ackman

Okay. Great. Look, we're really grateful. I have to say that the quality of the questions we've received from our shareholders is really fantastic, and it enables our other investors who are a little more timid about asking questions to learn answers to things that they would like to know. So we like this approach of really having a broad -- open the questions to a very broad number of shareholders. We thank you for being an investor in Pershing Square and the Pershing Square funds. Have a great day.

Operator

This concludes today's call. You may disconnect.