If I had a million dollars for every rumored partner for Pershing Square Tontine Holdings (NYSE:PSTH), I’d be Bill Ackman and a very rich man. As it is Pershing Square stock is still looking for a mate.

The latest rumor is Ackman’s special purpose acquisition company would merge with Stripe, the payments platform. Stripe chief executive officer Patrick Collison squashed the rumor like a bug on the sidewalk.  

Before that, it was Airbnb (NASDAQ:ABNB). They also turned him down, opting to make an initial public offering at $68 a share.  

It seems like it was only yesterday that Ackman sold 200 million units at $20 per unit, but PSTH closed on July 21. We’re coming up on five months down, 19 left to find a mature unicorn.

Ackman’s strategy of revealing exactly what type of business he’s looking for has made it increasingly difficult to pull the trigger on a massive deal. I wouldn’t expect much movement until the IPO market slows and Pershing Square Tontine Holdings’ billions and a ticket to the show become too enticing to resist. 

I don’t doubt Ackman will find an agreeable partner, but it might not come until the 11th hour. Therefore, if you’re looking to make some money in the short-term off your $25 investment — that’s where it’s trading as I write this — I would definitely look elsewhere. 

Here’s why. 

There’s No Catalyst for Pershing Square Stock

If you’re looking to park some capital for 6-12 months with potential upside based on Ackman making a deal within this timeframe, I would say PSTH is as good a vehicle in which to bide your time.

However, if you’re expecting some near-term pop like Lordstown Motors (NASDAQ:RIDE) experienced after it combined with DiamondPeak Holdings in October, I think you’ll be sorely disappointed.

As my InvestorPlace colleague David Moadel recently stated, you’re betting on Pershing Square stock solely because of Bill Ackman. Sure, the fact that it’s bringing as much as $5 billion in cash to the negotiating table is attractive to potential targets; at the end of the day, you’re betting on the jockey, not the horse. 

As I’ve said in my seven tips for picking the next big SPAC IPO, the management team is the most important point for evaluating any SPAC investment, followed by a specific industry focus. Ackman gets 40 points for the former, only 10 points for the latter. 

Where we stand today, there’s no catalyst on the horizon to move PSTH stock.

The Best Part of Owning Ackman’s SPAC

Unique to Ackman’s SPAC is the fact that he didn’t get a sweetheart deal for putting Pershing Square Tontine Holdings together. In fact, Pershing Square paid $67.8 million for warrants, which, if exercised, would give it 6.21% of the SPAC. 

Furthermore, Ackman’s warrants are exercisable at $24.00 per share — a 20% premium versus the standard 15% — and it won’t exercise its warrants for at least 36 months after closing its combination. 

In July, CNBC gave two examples of SPAC sponsors that paid very little to get quite a lot.

Goldman Sachs paid $16,005,000 for warrants to buy 8 million shares at $11.50 plus 20% of the SPAC in Founders shares. In the case of Dan Loeb and Third Point Capital’s sponsorship of Far Point Acquisition Corp., the hedge fund paid $12,025,000 for 8 million warrants at $11.50 a share plus 20% ownership of the SPAC in Founders shares. 

However, looking more closely at Third Point’s investment in Far Point, it purchased 9.8 million warrants (exercise price of $11.50) for $14.7 million ($1.50 per warrant). The warrants convert on a one-for-one basis. 

Third Point also bought 4 million units at $10 each in a private placement concurrent with Far Point’s June 2018 IPO. That brings the hedge fund’s investment to $54.7 million for 4 million shares and the right to buy 11.1 million additional shares at $11.50 each. 

There’s not enough time in the day to figure out precisely how much money Third Point’s invested in Far Point, which merged with Far Point on Aug. 28, except to say it was far more than $12 million as CNBC suggests.

What I do know is that Ackman’s SPAC considers the best interests of all of the shareholders.   

The Bottom Line by Pershing Square Stock

InvestorPlace’s Mark Hake recently discussed how Pershing Square could end up with a big minority stake in Bloomberg LP. There’s another million in my bank account. 

But seriously, it would be an awesome investment. 

“[T]heoretically, the SPAC could invest up to $6 billion and more than that if it decides to sell debt,” Hake wrote on Dec. 16. 

“The Post article says that Michael Bloomberg might consider selling up to 20% of his $60 billion publishing company, Bloomberg LP.  Bloomberg owns 88% of the company. So theoretically, he would still be in charge of the firm with a 66% stake.”

Hake goes on to say that Pershing Square Tontine Holdings is the only SPAC he would consider investing in before a merger announcement. 

In terms of SPAC sponsors, Ackman is most certainly at the top of the heap, both in terms of the structure he’s put together and the focus he has on the target company he desires to combine with. 

As my colleague says, it makes Pershing a unique vehicle. Ackman will close a deal. Just not before sometime in 2021.  

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.