Hello and welcome to the third quarter 2025 investor call for Pershing Square Holdings. Today's call is being recorded. It is now my pleasure to turn the call over to your host, Bill Ackman, CEO and portfolio manager. Thank you, operator. Welcome to the third quarter conference call. We've had a strong year to date, certainly through Q3 and even up to the present, north of a 20% return, and nicely in excess of the S&P for the year. Despite overall strong performance, we don't get them all perfectly right. I thought we'd start the call focusing on a couple of investments that have not performed well this year. Why don't I turn it over to Anthony to talk about Chipotle? Let's start there. Thanks, Bill. We actually sold our remaining shares in Chipotle this year following the company's third quarter earnings report. This concluded an investment in the company that was over nine years old. A very disappointing conclusion to what had long been a very successful investment for us. The stock IRR from our inception to exit was just under 16% versus just over 15% for the S&P 500. Fortunately, we had previously sold 85% of our initial 10% stake in the company at various times over our nine-plus-year holding period. That resulted in a realized IRR on the position of just under 22% and $2.4 billion in cumulative profits. The big question is, obviously, why did we decide to sell the rest of it this year after a stock decline of nearly 50%? Just to give you kind of some context for our thinking, from the first full quarter that Brian Niccol was CEO of Chipotle, that was the second quarter of 2018, through the end of 2024, quarterly same-store sales averaged 9%, and no quarter outside of one quarter that was impacted by COVID was below 3%. If you look under the prior management team, in the 10 years prior to the 2015 food safety scandal that predated our investment, same-store sales also averaged 9%. As the company started to report weak quarterly same-store sales this year, we believed, based on the various sales-driving initiatives they had in the pipeline and also the remarkable long-term historical performance since the company went public, that trends would eventually improve. Unfortunately, underlying trends progressively worsened throughout this year, including another step down during the current fourth quarter that was disclosed on the Q3 call. We do believe that macroeconomic weakness amongst low to middle-income consumers and younger consumers is the primary cause of this same-store sales slowdown, as evidenced by similar trends that peers are experiencing. We do not know how long this weakness is going to last. We do not know if it is going to worsen before it gets better. It is pretty clear that Chipotle and competitor management teams do not know either. They are doing the right thing by reinvesting in the customer value proposition by not taking price despite mid-single-digit food cost inflation, and they are therefore accepting kind of lower near-term margins. We do not know if this will be sufficient, and there might be more kind of to come there. Year-to-date of the kind of nearly 50% stock decline, forward earnings are only down 8%. Now, that's not good, right, because they're supposed to actually grow. Forward earnings are down 8%, but the PE multiple is down 44%. The vast majority of the year-to-date stock decline is due to multiple compression. While the current valuation of about 25x-26 x forward consensus earnings is cheap, if the company can quickly get back to achieving its long-term growth goals, we just didn't have enough confidence to underwrite this at this time. The business has a high degree of operating leverage. It's possible that if sales weakness persists for however long it persists, consensus margin levels will be below even current levels. This investment now has a much wider range and dispersion of potential outcomes around the company's near and medium-term earnings power. That's just much wider than we had foreseen at the beginning of the year and, frankly, at any time since we owned our investment in Chipotle. This made it a lot more difficult to continue holding the investment despite the fact that the company is now trading at one of its lowest multiples ever. There is a new CEO running the company since Brian left for Starbucks in August. He's a talented operator, but he's certainly off to a rocky start as a first-time CEO. In light of this, return to the company's historical premium valuation multiple is uncertain. We do have tremendous respect for Chipotle, and we wish the company all the best as it navigates what's proven to be quite a challenging environment for them and for the industry. Yeah, and we wish the company well. We think highly of Scott. We think he's a very good leader, did a great job running COO of the company for a long period of time. We wouldn't bet against Chipotle, and maybe someday we have an opportunity to become a shareholder again. Totally agree. On the topic of less-than-successful investments this year, let's talk about Nike. Maybe you feel free to jump in as well, Manning, if you'd like. Anthony, go ahead. Sure. We also exited our investment in Nike Options earlier this month. Unlike Chipotle, Nike was an unsuccessful investment for us. Much shorter holding period. We first invested in the company this time around in June or, sorry, in the spring of 2024. The cumulative return on Nike since we first invested was negative 30% versus the S&P, which was up 33%. The cumulative P&L was over - $600 million. The big mistake here was the initial underwriting. As we have previously communicated, we underestimated the degree of near-term revenue declines and operating deleverage, a.k.a. margin declines, that would be necessary to effectuate a turnaround here. The prior CEO had lost the organizational focus on sport. They overemphasized direct-to-consumer sales at the expense of wholesale relationships, and they failed to create innovative performance products while overproducing big lifestyle franchises. This really damaged brand heat in the eyes of the consumer. The prior CEO had admitted to kind of these mistakes in early 2024 and outlined a series of corrective actions, which is why we thought that the ship had kind of been set in a better direction. The magnitude of the corrective actions that were required were far greater than we anticipated. Fortunately for Nike, the company's controlling shareholder, Phil Knight, and the board of directors made the ideal management change in September of 2024 by bringing back long-time Nike veteran Elliott Hill. We believe Hill is a fantastic CEO. He has an excellent strategy to return to profitable growth by renewing Nike's obsession with sport, accelerating innovation, creating bold marketing, and rebuilding wholesale distribution, which he led for a very long time. At the start of this year, we converted our Nike common stock position into a deep-in-the-money call option position. We did this to preserve the upside potential of owning the stock while unlocking capital to make new investments. Since the start of this year, the turnaround is progressing a bit below where we projected for revenues, but materially below for margins. The reasons for that are twofold. About half of that margin decline versus what we projected at the beginning of the year is due to tariffs, which were new this year. The other half is due to more aggressive clearance activity of legacy inventory. Nike's down about 17% year-to-date. Most of that is forward earnings, which are down 15%, and the multiples effectively unchanged, down 2%. While we have confidence that Nike has the right CEO and the right strategy, we grew more uncertain of what long-term margins would look like as this year progressed. Can the company really get back to pre-COVID margins in light of tariffs, which do not seem like they are going away anytime soon, and in light of the more competitive nature of the industry? It is a more fragmented competitive landscape in athletic footwear and apparel now than it was for most of Nike's history. To meet our return thresholds for a turnaround at the time of our sale would have required us to assume stabilized margins at at least 13%, which is consistent with what they did pre-COVID. We did not have enough confidence to make this assumption in light of these new margin headwinds. We do believe that Nike's turnaround will be successful, but we don't know what success will look like from a margin perspective. The company's articulated confidence in getting back to double-digit margins, a very different outcome for shareholders if that's closer to 10 than 13, 14. We have tremendous confidence in Elliott, a tremendous admiration and respect for what he's doing at bringing Nike back to greatness. We wish him and the team at Nike the best of luck. Obvious question would be, with respect to Nike, it's a company we've owned before and got right in the past in a meaningful way. Any sort of overarching lessons from either the Nike or the Chipotle experience that will help us avoid similar mistakes in the future? Either a better exit from a Chipotle or a better timing on our acquisition of shares of Nike? Yeah, look, I think we're still reflecting on kind of lessons learned, but I think I would point to high-level ones, one for each. On Chipotle, I think high PE multiple stocks can be dangerous when things turn. I think that if everything's going right and you have a very proven leader running the company, you can afford to hold it for a while longer. I think with a high multiple stock, if kind of the trends slow for any reason, it's better to exit faster than to give management the benefit of the doubt. For Nike, I think one lesson that I and we, I think, have learned there is return thresholds for turnaround situations, even if the turnaround doesn't look like initially that it's going to be that severe, should be higher. I think had we gone in with kind of a higher required, had we had a higher required IRR for that one, perhaps we would have avoided making the initial investment. Great. Thank you. I want to focus on one other underperformer for the year, and then we'll get to why we're actually having a good year. I think it's good. Let's focus on the negative first. Universal Music. Let's talk about that. Ryan, go ahead. Sure. Universal Music, the business performance has continued to be strong. In their most recent quarter reported a few weeks ago, the company showed, for example, that revenues grew at about a 10% rate on a constant currency basis. Their adjusted EBITDA profit metric actually grew a little bit in excess of that, about a 12% rate. Those levels of business performance are actually very consistent with what the company has done since we helped facilitate a public listing nearly four years ago. The business performance remains quite strong operationally, in our view. As you mentioned, Bill, the stock has underperformed this year. In particular, it's really underperformed since the summer. The share price was in July a little bit above EUR 28 per share. As of earlier this week, it was as low as about $ 21.50, which is about a mid-20% decline in the share price. Actually, at one point earlier this week, the company was down to a 20 x PE multiple based on consensus analyst earnings for the next year, which is the lowest multiple that the company has ever traded at in our little over four years of ownership. We think the primary reason for the decline in the share price over the summer into now is really due to technical factors. For example, the largest shareholder of the company, the Bolloré Group, there was a ruling in July by a French court that they would need to buy out another publicly traded company. There was a fear or perception in the marketplace that Bolloré, who is the largest owner of UMG, would be a forced seller for a very large chunk of their shareholdings in order to fund this buyout that a French court was requiring. That forced seller dynamic, in our view, made it difficult for other people to want to buy the stock ahead of what could be a forced seller in a somewhat unknown timeframe and a potentially unknown quantity. As we transitioned from that happening in the summer to the fall, the U.S. government shut down. The SEC was unable to kind of fulfill any sort of request for a U.S. listing in UMG's example, which we think created potentially further technical headwinds. Stepping back a little bit, our view has been that the business performance remains very strong, as I mentioned, on the quarterly basis this quarter, as well as really over the last four years. We think that a share buyback really could address the technical concerns that would have happened. For example, the market perception that there is a foreseller that could be around the corner, hard to get market participants to want to buy shares in advance of that. Yet if the company is buying their shares, that could provide somewhat of an offset for the technical demand. In general, for a company that has very strong operational performance, we think a buyback at the lowest multiple that it has traded at for the last four years would be a good idea as well. Maybe I can turn it back to you, and you can talk a little bit more about the upcoming US listing. One of the package of rights we received when we became a shareholder of Universal Music was the ability to catalyze a listing in the US. We felt strongly that it's a US-headquartered global business, but even more dominant in the US and a very significant percentage, effectively half of their business, is a US company. It is listed in Euronext. That has limited the universe of people who can own the stock. Many US investors, by mandate, are not permitted to own Euronext-listed securities. Our view is materially more demand can come into the stock with the US listing. We also think the kind of cadence of quarterly reporting and the kind of information that becomes available when a company is registered in the US will enable better analyst coverage. The fact that the peers are US-listed companies will make, I think, easier, I would say, comparisons and, I would say, better understanding of the company. We catalyze that listing by exercising our registration rights. Our registration rights require, in order for the company to be obligated to register our shares in the US and create a listing here, for us to actually sell some stock. We have agreed to sell $500 million of shares as part of the listing of the company. Now, in light of the share price, we are not a very reluctant seller, but we believe the value in terms of improved transparency, as well as the improvement in the supply-demand dynamic, overwhelms the cost to us of selling a portion of our position at the current share price. Now, we've approached the company, and we've asked the company to simply seek a listing in the US without the requirement for us to sell stock. At this point, the company has been unwilling to let us withhold the $500 million of stock in the offering. We are going to go ahead and, with the offering, sell a portion of our stock at whatever the price is at the time. The listing, in order to catalyze what we think is a value-creating transaction for the company. Just further to Ryan's point, this is a company I've been on the board. I was on the board for a number of years. I think it's an excellent management team that understands the music industry. Where there seems to be a gap in understanding is in how the company approaches the capital markets and taking advantage of the company's balance sheet, the free cash flow it generates, and optimizing the company's use of capital. This is a business that's not going to require billions and billions of dollars of capital for acquisitions. The company's made that, I think, very clear. The nature of the company's dominant position in the marketplace also makes clear that it's very difficult for the company to do acquisitions of any kind of meaningful size in the industry. We remain puzzled, really, as to why the company is not a more aggressive buyer, or actually why it does not buy back stock at all, and why, in addition to pointing out that the stock's trading at the lowest multiple it traded at, it is also approaching the highest valuation for Spotify, a significant asset on the balance sheet that the company has intelligently held on to at this point in time. Again, another opportunity for monetization and returning capital to shareholders. That is our strong view on that topic. Okay, let's focus to the positive. We are actually having a very good year. Let's talk about our largest investment at this point, Alphabet. That is Bharath, who is going to take that on. Go ahead, Bharath. Sure. Maybe to rewind back to when we originally initiated our position in Alphabet more than two and a half years ago, our investment thesis was that Google's leadership position in AI was being severely underappreciated. Our view then was the company had a unique full-stack approach to AI that came with several structural advantages, namely frontier research capabilities, world-class technical infrastructure, scaled distribution, and the access to immense training data. You could argue then that the main open question was around execution and whether the company would be able to harness all those inherent competitive strengths into their product roadmap. I think since we made our investment, and one of the reasons the share price has appreciated meaningfully both this year and over the life of our investment, but we still continue to remain very optimistic shareholders, is they've really stepped up to that question and done an excellent job on the execution front and leveraging their strengths. Maybe to just provide a few recent examples of that, earlier this week, Google released their latest and very widely anticipated frontier AI model, Gemini 3.0. Not only did it immediately jump to the top spot on all the benchmark evaluation leaderboards, more notably, they integrated Gemini 3.0 directly into Search and the Google Apps the same day that it was released, kind of highlighting the company's focus on improving the product velocity. Gemini 3.0 was also led by the DeepMind team, which was a startup that the company had very presciently acquired all the way back in 2014. That lab continues to be the leading kind of frontier research lab. On the hardware side, the company kind of has spent the better part of a decade optimizing their technical infrastructure to specifically run machine learning and AI workloads. As a result of that, they can now run those workloads at sort of industry-leading lowest cost per token. They have developed their own proprietary TPU semiconductor chips, which has not only reduced their reliance on NVIDIA's GPUs for running internal workloads, but I think what we've seen more so over the last year is they're gaining increasing traction from third-party Google Cloud customers. On the scaled distribution front, Google has incredibly valuable digital real estate and consumer mindshare. That is probably best seen through their rollout of AI Overviews, which are the summary AI search responses that are directly embedded in Search. AI Overviews is now being served to more than 2 billion users. If it were to be considered its own standalone app, it would be by far the most widely used AI app. Lastly, kind of on the data front, we believe Google's ability to train kind of on a wide corpus of first-party data, including YouTube videos for image and video generation, is a very valuable long-term differentiator. Tying all those advantages to the operating results, those advantages are now being clearly reflected in the company's ability to grow at scale. For context, Google generated $100 billion of quarterly revenue in Q3, and those revenues grew at a 15% rate. Just their core search and YouTube franchises, despite their maturity, are continuing to grow at a low teens rate. Their cloud business, which is now a very scaled $50 billion run rate business, is growing at an incredible 32% rate. While the share price has appreciated meaningfully this year, we still think that the valuation is quite reasonable in light of the business quality, their leadership position in AI, and their ability to continue to grow earnings from this point on at a high teens rate for a very long time. Great. Thank you so much. Why don't we go to Uber, Charles? Sure. Thanks, Bill. As a reminder for everyone, we invested in Uber early this year at what we believe was a very highly dislocated valuation with extremely strong fundamental and operational performance overshadowed by concerns regarding disintermediation risk. Big picture, we feel increasingly confident that the market structure is evolving consistent with our underwriting hypothesis. Over the course of 2025, basically what Uber's done is they've advanced a number of partnerships with various autonomous vehicle and technology companies. Taken together, they're strategically advancing geographically focused commercial pilots with line of sights to thousands of autonomous vehicles covering major metro cities on their network within the coming years. Since our last update, one notable callout is a marquee partnership Uber announced with NVIDIA this past month. The partnership, it's interesting, it coalesces around NVIDIA's Drive AV platform as a reference compute and sensor architecture to make any vehicle an autonomous vehicle, i.e., L4 ready, which enables OEMs and developers to accelerate their AV technologies respectively. It offers an extremely credible counterpoint to Waymo and Tesla's respective architecture. You essentially have what was looking like a potentially two-player market developing to a credible third alternative, which can help some of these small long-tail of AV players kind of accelerate their respective technology developments. Uber's role here is they're going to be contributing valuable training data to an NVIDIA data factory, which will support a foundational model upon which others can draw. The partnership overall, it's designed to lower costs of development and accelerate commercialization efforts for our industry participants. Now, against this backdrop, Uber continues to operate commercial operations for Waymo in several markets, including exclusively in Austin and Atlanta, with strong utilization data reinforcing Uber's unique value proposition. We expect the market structure will continue to evolve over time to maximize vehicle utilization and operating profits. We believe, basically, Uber is positioning itself to become a technology and hardware-agnostic partner of choice for the AV ecosystem. Transitioning to discuss operating performance, in short, financial results continue to be excellent. Notwithstanding their market-leading scale, growth is actually accelerating with operational metrics achieving new all-time highs in users, engagement, frequency, and trip growth. Top-line results, also notably, this growth is actually balanced across both the mobility and delivery business segments with 19% and 23% growth in the most recent quarter, respectively, which just gives you some scope of the scale and growth here. That roughly 20% blended bookings growth translates to 33% adjusted EBITDA growth and more than 50% growth in earnings per share as the company is scaling margins off a relatively low base, which is very impressive. Notably, the company is achieving this level of attractive operating leverage and earnings growth while continuing to make investments to seed the next generation of products and geographies, which we believe will sustain Uber's high rate of growth over the coming years. To just kind of double-click on this concept of investment, the stock has been relatively weak the last few weeks. Part of this, I think, was actually some people may have seen DoorDash, which is a primary competitor in the delivery space, announced an unexpected round of major investments, which caught investors off guard. The stock was down nearly 20% in response to that, and that's their primary competitor in delivery in the United States. I think there was some concern, is Uber also going to need to make a similar round of investments, or is the competitive intensity of the business increasing? Our perspective on this is basically DoorDash, basically, the company has grown very rapidly. They're very strong operators, but they didn't have amazing kind of forward-looking vision on the product architecture. Their technology stack kind of became slightly more outdated at a faster rate than one would anticipate for a newer, relatively speaking, company. They've also done a number of acquisitions, and they're using this as an opportunity to kind of integrate these acquisitions and rebuild their tech stack. Primarily, this seems like it was a miscommunication around the kind of IR and external communications from DoorDash. We don't think this represents a fundamental shift in the competitive intensity or kind of a desire for DoorDash to lean in. Importantly, we don't think that Uber has to make these same kind of investments. They're making such investments while simultaneously achieving their multi-year financial targets. We think this is kind of a unique issue to one of their competitors. Big picture, taking a step back, Uber is basically trading at a mid-20s multiple today, which we think is an extremely cheap valuation considering their high rate of earnings growth and attractive outlook. When does the Tesla overhang lift, if you will, the fear that Elon will have there'll be 10 million taxis driving around charging people $5 to go unlimited distances? What's interesting, what I'd say is that a factual statement, right, is that Waymo is far more capable today from a technology standpoint than Tesla. Tesla has grand ambitions. If you just look at the facts, the issue is it's hard to—it's impossible to scale a business if you don't have unit economics that work. It's a bit of a catch-22 where until you have a technology, until you have a cost structure that works, you can't scale. It's hard to say. I think 2026 is likely to be another year of kind of experimentation and kind of evolution rather than revolution. I don't expect to see kind of a major breakthrough. I think the nature, too, of scaling in robotaxis is there's a requirement to kind of validate and evaluate the models you're creating to make sure they're performing in real-world scenarios consistent with your modeled expectations. That, by its very nature, is kind of a slow methodical approach because if you released 100,000 robotaxis without knowing how the models perform in real-world settings, there's real-world consequences and people can die. I think, actually, Elon's been pretty measured and thoughtful around making sure that they are cautious in terms of their rollout of the products to make sure that they're performing as expected. In this regard, we'd say Waymo clearly has best-in-class data, best-in-class disclosure around safety, disengagements, etc. I think it would be positive if kind of Tesla demonstrated more of that. If I could add maybe one thing to that, I think the Tesla risk or the Tesla overhang is really centered on two variables. Number one, that Tesla itself will be the dominant market player in AVs and that if it is a dominant market player in AVs, it will not choose to partner with Uber. I think the way that this can resolve itself is that either one of those two premises shows to not be correct. To Charles's point, if there are more AV companies such as Waymo and there is actually a handful of other potential AV companies that are showing very strong progress aside from Waymo, if those companies start to become more dominant in the space and/or they start partnering with Uber, I think the perception will be that this will not be owned by any one company for AVs. Therefore, it would be a much more balanced marketplace, which I think will help resolve some of that overhang. That may be knowable within the next, I would argue, 12-24 months. Although timing is a little uncertain. Secondly, to the extent that Tesla does become further along in actually deploying robotaxis at scale, which to Charles's point does remain to be seen, they're certainly behind a lot of the targets that they have suggested over the last several years. Once they start scaling up, to the extent they are more willing to talk about partnerships, that could be the other way that this overhang resolves. I think that there are multiple ways that will become clear over the next year or two in which this could resolve in the way that we think, which will ultimately be beneficial for Uber. In short, we basically think the Uber platform is enormously valuable to Tesla and to all the other sort of AV companies. It is becoming even more valuable over time embedded in the mindshare and the consumer experience, a bit like Google's presence in search. Okay. Let's talk Brookfield. Charles, go ahead. Sure. Brookfield, they've had a very active 2025 with strong operating performance and significant business building and corporate development activity, particularly in recent months, including the pending acquisition of Just Group, which is a U.K. pension insurer that they're going to be acquiring early next year. Their recently announced buy-in of the 26% of Oaktree that they don't already own. To start, maybe I'll provide some perspectives on their financial performance. I'll focus primarily for now on Brookfield Asset Management, or BAM, which is, as a reminder, kind of comprises roughly 75% of the value of Brookfield Corporation, i.e., the parent entity which we own. BAM is generating very strong results. They're seeing roughly 15% growth in fee revenues with particularly strong growth in their credit and renewables businesses. In renewables, they closed on their second transition fund earlier this year, which is driving some of that strength. That roughly mid-teens rate of fee revenues is translating into fee earnings growth at a slightly higher kind of 16%-17% rate, which is basically strong operating leverage on the core BAM business offset by lower margins at Oaktree, which we think is kind of a transitory development which will reverse itself next year, setting the stage for even stronger kind of operating leverage. As we look to 2026 for BAM, we think they're poised for an excellent year with accelerating organic fundraising, a further step up in capital from BN Wealth Solutions. Again, part of this is that acquisition of Just Group and then efficiencies which they'll garner from fully consolidating Oaktree within BAM. Of note also, as you think about BAM for 2026, they are going to be in market with multiple flagships next year, including their next-generation infrastructure and private equity funds and their recently launched artificial intelligence fund. Each of these flagships, these are large, chunky $10 billion, $15 billion, $20 billion, $25 billion funds, which drive step function increases in fee-bearing capital, fee revenues, and of course, operating profits. Now, moving beyond BAM to the broader kind of Brookfield ecosystem and the cash flow streams that roll up to the parent BN, two kind of callouts. One, carried interest is beginning to meaningfully accelerate at BN, growing roughly 150% the last few quarters off a relatively low base. Earlier this fall, the company provided a forecast for $6 billion of carried interest over the next three years, which should begin to meaningfully kind of show up in 2026. It may be somewhat back-end weighted, but it's basically setting the stage for very significant growth next year. Second, a touch on Wealth Solutions, which is their annuities, primarily the annuities business that grew 15% this quarter, which saw a strong earnings contribution from the relatively small P&C business they have within their Wealth Solutions portfolio, which is offset by lower growth in their annuities business. Here, what's happening is we believe they're repositioning the asset book for higher long-term yields, but it's driving some temporary dislocation, which we think will reverse itself in the near term. Taken together, BN is tracking towards low to mid-teens distributable earnings growth this year, which we believe will meaningfully accelerate next year with step function changes, increase in both earnings contributions from Wealth Solutions, and a step up in net carried interest realizations. Also of note, the company hosted their annual investor day this past September, and they established a target for nearly $7 of earnings per share in 2030 or 25% compounded growth from here. In that context, we note that we think Brookfield stock is extremely cheap. It's trading at roughly 15 x our assessment of forward earnings. We anticipate accelerated share price performance tracking with kind of the rate of earnings growth we anticipate to see from them over the next few years. Thank you, Charles. Fannie, Freddie, was it yesterday? It seems like a long time ago that we gave a presentation on our thoughts for a path forward for Fannie and Freddie. The president and members of the Treasury Secretary and others have talked and posted on Twitter about potential plans for an exit from conservatorship and/or an IPO for Fannie and Freddie. We think someday a public offering of shares by the government may make sense. We do think there's an important step that should be taken beforehand that's a much lower-risk alternative. What we've proposed both privately to the administration, we had the opportunity to share these ideas with the president, with Secretary Lutnick, Secretary Bissent, as well as Director Pulte in the recent past, which we then shared in a public forum so that the administration could get a sense of the market as well as the various commentaries' view of our, let's say, trial balloon. It's really a very simple next step. If you think about the Trump administration's first term where the president started to put Fannie and Freddie on a path to removal from conservatorship, the most significant step was reversing the theft or stopping the theft, I guess I would call it, where Secretary Mnuchin basically ended the net worth sweep and allowed these entities to start building capital. That was a very important step for actually reducing risk in our housing finance system, putting Fannie and Freddie in a position where they could, on a standalone basis, support the guarantees that they had outstanding. I think that was a critically important step. We think the next step should be an acknowledgment, really, it's an accounting for the payments that have been made to the government. Basically, the U.S. government injected $191 billion into these companies after the financial crisis and extracted an appropriate pound of flesh, which is a 10% return on that capital, as well as warrants on 79.9% of both companies. They basically took it was a distressed bailout with very onerous terms, the most onerous terms of any of the banking financially related companies, only I think tied maybe even actually ultimately the amended version of AIG, I think, was even less onerous than Fannie and Freddie. Now, the administration, the companies have paid back $301 billion of the original $191 billion, which is more than the 10% return they're entitled to. From an accounting perspective, the preferred remains outstanding on the balance sheet. That's really a function of the net worth sweep, a previously never seen before transaction. What we're recommending is that the payments to the government be accounted for. The result would be eliminating the preferred line item from the liability section or the equity section of the company's balance sheet. The next step, of course, would be exercising the warrants. The government will become now very large shareholders of both companies. The businesses are in a position to be listed on the New York Stock Exchange. Importantly, we think they should stay in conservatorship. What that means is there's literally zero risk to mortgage rates. The government is still completely in control of both enterprises. Now the necessary next steps can take place over however long they take in a very measured, thoughtful manner. We believe this accomplishes all of the administration's goals, at least the stated goals of showing how much value has been created for taxpayers. The president did the right thing in not selling these entities in his first term. They've increased in value probably fourfold or so from when the $100 billion offer that was apparently made to take these businesses private, I guess. We think there's still a lot more room to run. We think it's not a good time to do a public offering of shares because it would be dilutive to the taxpayers' ownership of both entities. The government will be able to show a mark-to-market value and demonstrate incremental and important progress without taking a risk to mortgage rates. We shall see. The good news is that transaction, again, the president's got a lot on his plate. We're approaching Thanksgiving, but it's actually theoretically possible. We've spoken to the exchange about a relisting. They're obviously prepared to do whatever is required to get that done. It could be a nice Christmas present for the long-suffering shareholders of Fannie and Freddie, which include more recently some institutions. I mean, Pershing Square has been around here a while, but other institutions have bought stock over the course of the past year. There are literally millions of small shareholders who are cheering for the president to save them. This would be a very nice Christmas present for that group of owners. Why don't we go to Amazon? Bharath, why don't you update us? Sure. Earlier this year, we were able to opportunistically build a position in Amazon during the April market drawdown. It's a company we'd followed for a long time. I've always admired the fact that it operated. What price did we pay in the drawdown? Our average initial cost was around $175, which was a 25x entry multiple on forward earnings, the lowest multiple that the shares had ever traded at in their history. Thank you. Yeah, it was a company we'd been following for a long time. We always admired the fact that they built and operate two of the world's great category-defining franchises between their cloud business, AWS, and their e-commerce retail operations. Our view is that both of those businesses are supported by decades-long cyclic growth trends, occupy dominant positions in their markets, and share the kind of core tenets of the Amazon ethos of focusing on the consumer value proposition and leveraging their scale to continue to reinvest and be the low-cost provider. Despite those compelling attributes, there were concerns around the growth trajectory of AWS. Coupled with the broader tariff-related market volatility, that kind of provided us the attractive entry point. Our view was that those concerns underestimated the resiliency of the business model as well as the duration of its growth runway. While it's still early days, the company's operating results since then have kind of helped validate our thesis. Starting with the cloud segment, AWS today is a $120 billion business that continues to grow at a high teens rate. In fact, last quarter, the growth rate accelerated from 17% to 20%. Notably, that impressive growth rate was actually limited by capacity constraints as consumer demand for compute vastly exceeded the pace at which AWS is able to bring new supply online. Is that constraint driven by just the time to build the new facility or GPUs or? Yeah, I think it's a combination of the above. To that end, the company has been very focused on accelerating that build-out. In the past 12 months, they've brought online 4 GW of power, which is more than any other cloud provider. For context, Amazon has doubled their data center capacity since 2022 and are on track to double it again by 2027. In light of the kind of supply-constrained nature of AWS's growth, we actually think those investments today to accelerate the build-out are a very efficient and high-return use of capital. Kind of shifting the retail business, they've seen very minimal, if any, impact from tariffs. Over a longer timeframe, we're very encouraged by the potential for significant margin expansion in that segment. If you were to look at peer margins and adjust for Amazon's business mix, as well as taking into account their much higher margin and faster-growing advertising revenue stream, we estimate that Amazon's structural retail margins could be several hundred basis points above the 6.5% margins they're expected to realize in 2025. In addition to that, they're also extracting a lot of productivity gains from their warehouse automation initiatives and their one-of-a-kind logistics network. As just a proof point on that latter point, per-unit shipping costs have been steadily declining for the last eight quarters in a row. Stepping back, while it's still early days and while Amazon's share price has appreciated about 30% from our initial cost in April, it still trades at a very attractive multiple relative to peers like Microsoft and Walmart, and especially in light of its ability to grow earnings at a nearly 20% rate for the next few years. Thank you. Let's go to Restaurant Brands, Bharath. Sure. Thanks, Bill. Restaurant Brands actually continue to execute at a very high level. Its most recent results reinforce both the strength of its brands and the resiliency of its business model in what can only be described as a fairly tough economic backdrop for consumer businesses. During the quarter, the company-wide same-store sales grew at 4%. Units grew by 3%, leading to 7% system-wide sales growth. Operating income grew by 9%. Looking at their biggest businesses, Tim Hortons in Canada increased their same-store sales by about 4%, which outperformed the broader Canadian QSR industry by three whole percentage points. This now marks the 18th straight consecutive quarter of positive same-store sales. That, by the way, has primarily been driven by underlying traffic growth. For several years now, Tim's has been laying the groundwork in its back-to-basics plan with new innovation both in cold beverage as well as afternoon foods while still maintaining their lead and providing good value for consumers in its core beverage, coffee, and breakfast segments. Tim Hortons actually is also now growing its unit count in Canada for the first time in years, a market that many consider too mature. These units are actually a lot more impactful to the company's bottom line than their units abroad because there are obviously higher unit volumes, and Tim's Canada has higher unit take rates as well. In the international business, same-store sales grew by 6.5%, also above the primary competitor, McDonald's, which has also been the case for actually several quarters now. The company also brought on a new partner to manage the Burger King China business, who will actually invest $350 million into the business shortly. That will allow that BK China business to double unit counts over the next five years. That will help Restaurant Brands, a total company, achieve their 5% unit growth algorithm in the coming years. At Burger King in the U.S., same-store sales were up about 3%, again, also ahead of burger peers. The results have actually also outperformed the broader U.S. burger category for multiple consecutive quarters. That is really due to all the initiatives they've done under their Reclaim the Flame program. While investors were worried that competitors are pushing deeper into value, Burger King has actually done a really nice job striking a nice balance between innovation and premium offerings, doing nice tie-ins with movies, and also providing everyday value with their duos and trios platforms. In what can be best described as a very challenging economic backdrop, as Anthony alluded to, we think Restaurant Brands' results highlight the very nice defensive qualities of its business. While low-income consumers have pulled back from spending, many often skipping breakfast, Restaurant Brands have still continued to grow its sales as it's benefiting from the trade-down for middle and higher-income consumers trading down. Are Chipotle customers becoming Burger King customers? Look, that's a question we've been discussing at length. I'm not sure it's specifically from Chipotle to Burger King, for example. We do think what's happening, it's really a twin economy. People that own stocks that are wealthy are doing incredibly well, and they're continuing to spend where they used to. At the same time, the low end of the economy is doing very poorly, and they're basically pulling back. I think a brand like a Burger King or a Tim Hortons that caters to everyone is benefiting, obviously losing those low-end customers, but is benefiting from the mid-end trading down. I think the fast casuals, based broadly, which obviously Chipotle is a member of, is missing that middle sort of demand vacuum where the high-end isn't trading down, but the mid-end is trading down to the quick-service category broadly. That's certainly probably happening. What's also notable about Restaurant Brands is that it's obviously a primarily franchise business model. It's also not as directly exposed to the labor and cost inflation to the same extent as others. Thanks to its consistent growth and defensive business model, we expect that Restaurant Brands will actually still grow operating income at 8% this year, which is in line with its long-term algorithm. The business still trades at a discount to its primary peers. It's trading at about 17 x earnings, whereas McDonald's and Yum are trading at about 23 x next year's earnings. We think a business of this quality with these characteristics should trade at a much higher valuation. We're optimistic about the prospective returns from here. Okay, great. I'll just cover Howard Hughes. The short story here is the underlying real estate business of Howard Hughes is performing extremely well. The company reported an outstanding quarter, really on every metric of net operating income, land sales, profits from their MPC business, and the appreciation of their existing land portfolio. The management teams of Pershing Square and Howard Hughes are working very well together, which is great. We are working, as we've publicly disclosed, on a transaction to acquire an insurance company that would become really the beginnings of our diversified holding company strategy for the business. Our goal is to complete a transaction as early as, at least announce a transaction as early as, year-end or perhaps in the early part of the new calendar year. We'll have a lot more to say about that if and when we are successful in completing a transaction that makes sense. The short version of the story is that we intend to buy a good insurance platform with an excellent management team. They can run a profitable insurance operation with Pershing Square managing the assets of that insurance company, I would say akin to the way that Warren Buffett has managed his insurance company's assets and the way really he's managed the insurance company operations itself. Why don't we go to Hilton? Ryan, why don't you give us an update? I'll just point out Hilton has been an excellent investment for us over many years now. We have enormous respect for the management team, and it's one of the best businesses that we've ever owned. has become a smaller part of the portfolio, unfortunately, or fortunately, because everyone else has recognized the qualities of the business. We still think it is an attractive investment from here, but lower on the IRR thresholds than obviously when we originally acquired our position. Go ahead. Yeah, I just wanted to make a quick point that I think this quarter's results are really emblematic of why we think Hilton's business model is unique and incredibly resilient. For example, the company's same-store sales metric, RevPAR, actually declined about 1.5% this quarter as there was some macro softness, which clearly has impacted some of our restaurant businesses, but that actually impacted some of the travel businesses as well. Typically, what you would expect when a company has declining same-store sales, you would expect a decline in the profitability of the business. Hilton actually grew its adjusted EBITDA, its profit metric, 8% this quarter despite the decline in same-store sales, which is very unique and really reflects the two fundamental drivers of the business that are incredibly attractive to us, which are they have an enormous opportunity to grow their unit or hotel count around the world because the brands that they have are able to take advantage of the increased travel trends, and they are better than a lot of the alternative brands. Other people put up the capital for that because it's a good return for them, and Hilton is able to earn a very high franchise fee. That is really adding 6-7 points a year of growth to the business, and that's a trend we think will continue for a while. The second factor is just incredibly strong cost control due to just overall great management. The company is able to really limit the growth in its expenses despite having a very strong and steady revenue growth base. Profits still grow even when same-store sales decline, which is a typical anomaly in business, but it is part of Hilton's core model. On top of that, this company has just superb capital allocation. It continues to buy back about 5% of its shares on a year-over-year basis. With a kind of consistent underlying tax rate, the company would have grown earnings at a low teens percent this quarter despite not growing same-store sales due to some macro softness. I think to your point, one of the reasons why we continue to hold Hilton is those unique characteristics where if the business performs in a normal macro environment well, we think there's a clear line of sight to 16%-17% earnings per share growth annually for a very long time. If the macro is a little weaker and same-store sales don't even grow, we're still able to get pretty comfortably above a 10% rate of earnings per share growth, which is very unique. The market has recognized, as you pointed out, that this quality of the business and the growth characteristics should be deserving of a higher multiple. The company traded about 30 x next year's consensus earnings, which is part of the reason why we've reduced our position is we think that the growth profile will offer us a reasonable return, but there's less opportunity for an accelerated annual return beyond the earnings per share growth when the multiple is, I think, reasonable at 30 x. We still think it's very unique and a very strong management team, which is why we continue to hold the position, even though it's somewhat smaller, as we've been trimming as the share price and the multiple have increased over time. Let's do an interesting compare and contrast. Yep. Let's compare Universal Music to Hilton. They have some fairly analogous economic characteristics. Let's compare the trading multiple of one versus the other. Why is Hilton traded 30 x earnings and Universal traded 20x or 21 x earnings? I think you're entirely right, which is that while they obviously operate in different industries, the economic characteristics are very similar. They are both royalty-like companies that are very capital-light with very strong operating margins. In Hilton's case, we believe over time the company is likely to grow at something along the lines of maybe an 8%-10% a year for revenue. That adjusted EBITDA is probably going to grow a little bit in excess of that. Those will sound very similar because that is exactly what UMG is growing at. Its revenue is about 10% right now. Management guidance, let's stick with the management guidance on those numbers. Correct. That is in line with the guidance over time. It is interesting that they look incredibly similar on the operational performance, if you will. The key difference, as we pointed out earlier, is UMG has not bought back a single share, whereas Hilton, pretty much like clockwork, buys back about 5% of its shares. They allocate all of their free cash flow, the substantial majority of free cash flow to share buybacks. Because of the high margins and the significant degree of predictable revenue growth, they have a nice amount of leverage, which the business can support. Obviously, UMG has an unlevered balance sheet when factoring in its stake in Spotify. I think the US investor base, US listing of Hilton, combined with the capital allocation, has given investors a lot of confidence, which has allowed them to price in a multiple of something like 30 x. As we mentioned earlier this week, UMG was trading at 20, which is a very large gap between the two, despite very similar economic characteristics and growth characteristics currently. Thank you. Let's go to Hertz on the other end of the balance sheet spectrum. Yes. Not unlevered. In fact, very levered and also has some operational leverage. Look, the interesting thing about Hertz is that it's actually making a lot of progress on its turnaround efforts. The results in the third quarter showed those. It is the strongest quarter in years. It actually generated their first positive EPS for the first time in two years. They demonstrated meaningful traction on the operational levers that we've discussed previously as our investment thesis. Number one, the fleet refresh. When we invested, they basically had an upside-down fleet. Now they've completely refreshed it. The average vehicle in the Hertz fleet is now less than 12 months old. As a result, depreciation per unit per month, DPU, which is their metric, was $273 during the quarter, well below their long-term target of $300. Importantly, next year's vehicle purchase negotiations, which some investors are worried about given some of the tariffs and inflation, are also nearly complete. The management team is confident that that will also support strong unit economics with depreciation of less than $300. Operation of the company is also making big strides. This quarter, utilization was 84%, the highest level the company has ever delivered since 2018. Revenue per day, or RPDs, were down low single digits, but they continue to improve and improved in October as the company has been implementing changes and modernizing its pricing systems. On the cost side, they also continue to make progress through automating processes, lowering headcount, and rationalizing some of their footprint. We expect both SG&A and DOEs, which is their measure for expenses per day, to decline from current levels. The company is well on its way to delivering sort of a mid-single-digit EBITDA margin next year and has line of sight into delivering $1 billion of EBITDA in the coming years. What makes Hertz very interesting from these levels is— You mean a billion dollars of annual? Exactly. A billion dollars of annual EBITDA in the coming years. They have a target for 2027, actually. What makes Hertz really interesting from these levels is that it also has a number of upside levers or call options available to the company. First, the company has been setting up infrastructure to sell more used cars through its own retail channels as well as its partnerships. The company actually has a partnership with both Amazon as well as Cox Automotive. It is now live with their rent-to-buy program in over 100 cities where you can rent a car, try it out, and if you like it, you can buy it. We believe the company can turn this into a meaningful profit center that can lead to structurally lower depreciation costs because obviously you sell a car to the retail channel at a much higher profit than the wholesale channel. That also allows an opportunity for them to sell additional F&I revenues. Second, we believe Hertz also has the potential of being a significant partner to the various mobility companies that are rolling out autonomous vehicles. Hertz has an expertise in vehicle maintenance, servicing, and it has a very significant scale with its parking facilities that make it an ideal partner to help manage as folks try to roll these out. Both these revenue streams have the potential of being large businesses for Hertz in the future and helping it further leverage its fixed cost base and brand. On liquidity, the company is also now in a much stronger position. Recall when we invested, some investors were speculating the company may need to declare bankruptcy again. That is definitively not the case today. It has more than $2.2 billion of total liquidity. We actually helped facilitate a convertible bond issuance earlier this year and actually increased our exposure to the company. The company also entered into a capped call transaction, which means that the convertible bonds are not dilutive unless the stock essentially triples from current prices. With its current liquidity, as I mentioned, of over $2 billion, they have ample liquidity to address their near-term maturities and to help grow their fleet next year, which will again help them lever their fixed cost base. Stepping back, Hertz today is a much more leaner, more efficient company with, frankly, an enviable young fleet that its peers do not have. On top of the core rental business, the company is also developing multiple new profit streams, as I mentioned, such as the retail used car sales, servicing AVs, as well as serving the broader mobility segment. We continue to believe that Hertz has asymmetric upside from current prices. Obviously, in light of the fact that it's going through an operational turnaround, we have sized this as a smaller investment than our typical holdings. Why is the stock so cheap in light of all of the above? It is not immune to some of the consumer issues that we are seeing in the broader space. What is also notable is that the government shutdown has obviously had an impact on travel broadly. People are traveling a little bit less. Hertz does benefit to an extent as people have been taking out what are called one-way rentals. Instead of flying, you just take a car. Certainly, I think it is probably a net negative if the consumer environment is weaker and people are not traveling as much. There has also been broader concern around RPDs. We think that is a little bit misguided. The way Hertz reports its RPDs is really burdened by the fact that they have mixed towards smaller cars, which certainly have lower prices, but their EBITDA is accretive. Next year, that should be a tailwind. Candidly, I think these car rental companies are generally misunderstood. There is not a lot of market cap for long investors to dig into and to get excited. Both Hertz and AVs have the potential to gather some of these long-only investors as they come out of their turnarounds starting next year. I think Hertz specifically has a very interesting opportunity to grow its EBITDA from basically nothing today to $1 billion in the coming years. Okay. Good. Thanks, Bharath. We've always received questions in advance of the call. We do our best to answer them during the pendency of the call. Just a couple that we didn't kind of get to. One is, since both Howard Hughes and the Pershing Square Funds are managed by Pershing Square, how should investors think about investing in Howard Hughes versus Pershing Square's core strategy? The answer is these are, I would say, different investments with some overlap. Howard Hughes, of course, the core business today is a master plan community business. It's a business we like. It's a business that we expect to generate a lot of cash over the next years and decades. We think provides a very good base to build our version of a diversified holding company. With the acquisition of an insurance subsidiary or insurance company that becomes a subsidiary of the company, over time as that business scales, that will become a more important part of the operation of the company. We intend to manage that insurance company portfolio, the floating US treasuries, the equity in common stocks, using the same kind of investment philosophy we have at Pershing Square. There are clearly some similar elements. It is an operating company. It is a C Corp. We intend to take the cash that the business generates over time and to deploy that capital in acquiring principally controlling interests in most likely private businesses. The portfolio will look different. It is not a large cap or mega cap minority stake investment vehicle. It will be an operating company that will buy for the very long term various businesses. Today, you're buying Howard Hughes at about a 15% discount to the price we paid for shares and an even bigger discount to kind of the, I would say, the NAV of the real estate portfolio. That is a nice place to start an investment. Ultimately, the success of Howard Hughes will depend on how we do with our various initiatives there. I like Howard Hughes a lot. Excited about what we're going to do there. An entity where you have that's a public company, we have access to the capital markets, may create some flexibility over time for us to do some things that we can't do in the Pershing Square Funds. Over time, I would say they will be different entities, but the same investment principles will be applied. Shareholder, I would say, orientation will be applied to both. The other thing I would say is that the Pershing Square management team has a very large investment in all of the above. About approaching 30% of the AUM that we manage today is, I guess, 28% or so today is employee capital in the funds. On a look-through basis, therefore, the employees own an interest, a meaningful interest in Howard Hughes. On top of that, the Pershing Square management company made a $900 million investment in the company. We have, I would say, a very high degree of what you might call skin in the game in both the funds as well as Howard Hughes. I think Howard Hughes itself is at this point still not well recognized. I think if and when we are successful in beginning to make this business look less like a real estate master plan community and more like a diversified holding company, we expect and we deliver results. We expect the market to notice. With respect to hedging, our approach, as you likely know, is one, we pay careful attention to what's going on in the world from a macro perspective, from a geopolitical perspective, from a political perspective. All of these things can have an impact on markets. Our first priority is what are the risks in the system that could cause a massive market decline. To the extent we identify risks like that, as we did pre-financial crisis or pre-COVID crisis or pre-Fed interest rate inflation, I would not quite call it a crisis, but where the Fed was forced to raise rates very aggressively, we were able to hedge those risks because of this sort of surveillance of what is kind of going on in the world. Today, we really have no hedges in place. We do not try to hedge short-term kind of stock market declines or what some people might think of as a periodic overall multiple of the markets above normal. There are lots of reasons why a market cap-weighted index today appropriately should be trading at a higher multiple. If you think back to 2009, we were not businesses, frankly, like NVIDIA. And we did not have this massive growth driven by a major change in technology. We are seeing interesting places to put capital. We're doing due diligence. Our approach is to, as we say, we sort of build a library of businesses that we get to know pretty well. Occasionally, new companies emerge, go public, get spun off. We track as many of them as we can in terms of ones that meet our criteria for business quality. Then every once in a while, they get really cheap. Amazon, being kind of a recent example of a company we admired for years, was always a little too expensive, but a business we wanted to own. I think we started buying stock at something like $161 a share, which seemed to be a really kind of unique opportunity. With that, I just want to thank you for joining the call. We look forward to updating you. I think our next event will be our Robin annual meeting that we will stream at some point in January or on Analyst Day. Thanks so much. Thank you, everyone. This concludes your conference call for today. You may now disconnect and have a great day.