In a recent setback for renowned hedge fund manager Bill Ackman, the Securities and Exchange Commission (SEC) has temporarily halted the initial public offering (IPO) of his new closed-end fund. Ackman, the CEO of Pershing Square Capital Management LP, had sought to bring his hedge fund approach to a wider audience through the creation of this fund.

The fund, which aims to invest in large-capitalization growth stocks with significant valuation discrepancies, had been slated to launch on July 29. However, an unexpected delay came after a letter from Ackman to the fund's board was forwarded to the SEC. The regulatory body requested additional time to review the contents of the letter before granting official approval, according to reports from the New York Times.

While the SEC review is expected to be a temporary hurdle rather than a complete derailment, it may require Ackman to provide further disclosures for the agency's approval. This process could potentially extend the timeline for the fund's launch, with estimates suggesting it could take place later this week or early next week.

Acknowledging the delay, Ackman revised down his initial expectations for investor participation in the fund. Originally foreseeing $25 billion in assets, the revised projection now places the fund's target between $2.5 billion to $4 billion, capped at $10 billion. Despite the adjustment, Ackman remains optimistic about attracting high-profile investors, having already engaged in numerous meetings and discussions with potential stakeholders.

Some reluctance to invest in the fund has been observed among certain fund managers who are concerned about violating their investment mandates. To address this hesitation, Ackman invoked the example of Warren Buffett's Berkshire Hathaway, suggesting that if owning Berkshire is acceptable, investing in his investment holding company should also be permissible. However, not all investment firms have been convinced by this argument, as some of the largest mutual fund complexes, including Capital Group Companies, have declined to participate for this reason.

While the SEC delay may have temporarily halted Ackman's plans, it is likely to be a speed bump rather than a roadblock for the closed-end fund. The regulatory review is expected to lead to additional disclosures and clarifications, which will then necessitate SEC approval. As the process unfolds, investors and industry insiders eagerly await the fund's official launch date, which is yet to be announced on the New York Stock Exchange site.

Overall, despite this setback, the anticipation and interest in Ackman's closed-end fund remain high, with its focus on value investing and strategic use of derivatives to achieve a synthetic short position. The fund's launch promises to provide an alternative investment opportunity for accredited investors seeking exposure to his unique approach in managing investment risks.