Welcome to 2018, or as we call it; Bill Ackman's Annus Horribilis IV.
And in recognition of his ongoing struggles, The Ack-Man has reportedly swallowed another chunk of his weaning pride and decided to cut management fees down even further at good old Pershing Square.
Ackman’s Pershing Square fund — after posting losses in each of the past three years — said it would slash its 1.5 percent annual management fee.
The discount for existing clients amounts to about 15 percent, sources said.
The move will cost Pershing about $32 million over the next two years, Ackman said in a letter sent to investors.
While this is a rather embarrassing thing to have to do (for the second time in as many years), when one considers that the fund's performance has left investors free from worry about paying out performance fees, Bill has to admit that fair is fair, especially in light of Pershing Square's whole Allergan clusterfuck:
Following the usual fee structure would “leave investors in a less than ideal position,” Ackman said in the letter.
“We believe a different approach, albeit one not contemplated by the funds’ documents, is appropriate,” Ackman said.
And the whole discount is going to be structured in a way that will spread the pain around slowly over time...
Over the next eight quarters, Pershing Square investors will see a reduction in their management fee totaling $32 million, Ackman said in the letter, sent to investors late Tuesday...By structuring the rebate this way, clients immediately pay a lower management fee and prolong the time until they pay a performance fee further.
Which is maybe ironic considering that Pershing Square investors are basically begging to pay a performance fee at this point.