Earlier today, I was reviewing the performance of FTSE 100 shares over various periods. I often do this, aiming to identify the Footsie‘s dogs and stars.
Over the past month or so, several of my ‘boring’ UK value shares have suddenly surged in price. These recent winners include various banking, asset management and mining stocks.
Yet one of our most impressive performers in 2024 is a high-flying stock my wife and I bought less than seven months ago. Also, it’s one blue-chip share that many investors have never come across.
Income and growth
Our latest family portfolio contains 15 FTSE 100 holdings and five FTSE 250 stakes. We bought almost all of these for their ability to produce market-beating cash dividends for passive income.
That said, I’m not averse to buying growth stocks for capital gains. Indeed, our portfolio also contains seven high-flying, mega-cap S&P 500 stocks. But Pershing Square Holdings (LSE: PSH) is the clear leader among our UK shareholdings.
Hidden value in a hedge fund
Despite having a market valuation of almost £8.8bn, Pershing is known to only a few investors I’ve met. For the record, it’s an investment trust — a collective investment fund with shares listed on a stock exchange.
Guernsey-based Pershing was created in 2012, but only listed in London in May 2017. Since then, it has easily beaten the FTSE 100 over almost all timescales. Here’s how this stock has performed versus the wider index over six time frames:
Period
Pershing*
FTSE 100*
Difference*
Five days
4.9%
2.6%
2.3%
One month
7.7%
2.9%
4.8%
2024 to date
16.0%
2.6%
13.4%
Six months
37.1%
4.0%
33.0%
One year
48.4%
5.8%
42.7%
Five years
213.9%
9.0%
205.0%
*These returns exclude dividends.
My table shows that for all periods ranging from one week to five years, Pershing has consistently beaten the Footsie. What’s more, the longer the timeframe, the wider the margin of victory for it.
For example, if I’d invested £1,000 into Pershing shares five years ago, I’d have a handsome £3,139 today. Meanwhile, the FTSE 100 would have turned my grand into just £1,090 (both excluding dividends).
What’s Pershing’s secret?
Pershing invests in a fund from Pershing Square Capital Management, a US hedge fund run by renowned American investor William ‘Wild Bill’ Ackman. This portfolio is highly concentrated and currently consists of just 10 US stocks.
I chose to invest with Ackman because of his outstanding track record. His success as an investor has given him a personal fortune of $4.3bn. Also, hedge funds are usually restricted to the very wealthy, whereas I can back ‘Wild Bill’ for under £42 a share.
My wife and I bought Pershing shares last August for 2,989p a share. On Friday (22 March) the closing price was 4,156p. Thus, we’re sitting on a paper profit of 39.1% in around six months, beating all of our other FTSE 350 stocks.
Then again, investing in hedge funds can be highly risky. Thousands have closed down after losing money, while a few have blown up overnight. Furthermore, past performance is no guide to future returns, so Ackman’s magic touch might fade.
Nevertheless, I’m more than happy to hold on to this FTSE 100 super-stock for now!
The post Up 37% in 6 months, this is my favourite FTSE 100 share appeared first on The Motley Fool UK.
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This FTSE 100 super-share keeps on thrashing the stock market!
Cliff D’Arcy has an economic interest in Pershing Square Holdings shares. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.
