Two weeks ago, Pershing Square founder Bill Ackman made a big pitch whilst hosting CNBC’s Squawk Box for investors to come to his charitable Harbor Investment Conference—saying he would give an idea at the conference through which attendees could make back the ticket fare ($1,500) to the conference and much more at a very low risk. At the conference last Thursday, Ackman revealed the idea: it’s Justice Holdings Limited, a “cash-shell” company with the sole purpose of finding a business to buy. Ackman started the company—he owns a 30% stake—with Nicolas Berggruen (aka ‘the homeless billionaire’) and Martin Franklin last year before taking it public, and Justice has raised around $1.4 billion from investors so far. The company trades under the ticker JUSH on the London Stock Exchange.
While Justice’s co-founders find a business to buy, the money from investors is invested in UK short-term treasuries. The founders have given themselves three years to find a company to buy (they have two years left), and if they are unable to find a “smart” investment, then Justice Holdings will liquidate. Berggruen’s website says “Justice’s objective is to consummate a transaction of $5 billion to $10 billion in Total Enterprise Value.”
Upon liquidation, investors will be paid a £10 dividend, so with the company currently trading at around £8.6, stockholders are guaranteed a 7% compounded return—and that’s the “downside,” according to Ackman. That 7% compounded return is better than holding money in a “zero per cent money market account,” Ackman said at the Harbor Investment Conference.
Justice Holdings appears to be a pet project between Ackman, Berggruen and Franklin—all three big names in the business and investment industry. Both Ackman and Berggruen have had successful buyout and takeover histories, and Franklin is a big name in the consumer goods business. Investors seemed to have reacted mildly to Ackman’s “idea”—JUSH was trading at around £8.4 when Ackman pitched it Thursday, and it is now trading at about £8.59.