If you don’t mind adding an element of mystery to your portfolio, consider Pershing Square Tontine Holdings (NYSE:PSTH). Just be advised that, by acquiring PSTH stock, you’ll own a stake in a special purpose acquisition company (SPAC) with a yet unspecified merger target.

Back in January of this year, I cautioned prospective investors that the stock was getting too frothy. And indeed, the share price did come down after that opinion was published.

Is the lower price in PSTH stock a bad sign, or a golden opportunity? And what should we make of the extended wait for Pershing Square to identify an acquisition target?

These are the questions on people’s minds, and we’ll try to dig up some answers today. But, first thing’s first — let’s drill down on the stock’s most recent price action.

A Closer Look at PSTH Stock

As I mentioned earlier, I offered a cautious tone on the stock in mid-January, when it was trading at $29. By Jan. 27, the share price had declined to $26 and change.

There was a quick rally after that, though, as the bulls managed to push PSTH stock up to a 52-week high of $34.10. Unfortunately, this brief rally turned out to be a head-fake.

At the close of the market on March 19, the stock landed at $25.60. The following Monday morning, the shares were trading slightly higher, but still below $26.

More cautious investors could wait for a lower price point, such as $20. However, a major moment could arrive soon for Pershing Square Tontine Holdings, which might cause the share price to go much higher.

Bill Ackman’s Unicorn Hunt

As I’m writing this, Pershing Square Tontine Holdings Chairman and CEO William “Bill” Ackman has yet to identify a specific SPAC merger target.

So, that’s why the sense of mystery and anticipation is building. However, investor patience is beginning to wear thin.

In the finance world, a unicorn is typically defined as a billion-dollar-or-greater start-up business. It’s generally also going to be a buzz-worthy company.

That’s the type of company that Ackman’s seeking for Pershing Square, no doubt. Meanwhile, PSTH stockholders are betting on Ackman’s entrepreneurial prowess – and hoping that he’s already got his eye on a unicorn.

Famously, Ackman co-sponsored the blank-check company Justice Holdings, which acquired Burger King for $1.4 billion.

Plus, Ackman’s hedge fund reportedly made $2.6 billion from a $27 million investment in bond-related financial instruments when the stock market crashed in March 2020.

So, perhaps Ackman can score another victory with Pershing Square Tontine Holdings — if he can find his unicorn soon, that is.

Running Out of Options?

Ackman being coy about revealing his merger target for Pershing Square was fun and exciting for a while. Now, it’s starting to annoy some shareholders.

There’s even talk that Ackman may be starting to run out of viable merger targets. Could this be possible?

Consider the payments company Stripe, which some folks thought of as an ideal acquisition target for Pershing Square.

On the official website for Pershing Square Tontine Holdings, it states that the company “will seek targets in four principal market segments: high-quality [initial public offering (IPO)] candidates, mature unicorns, private equity portfolio companies, and family-owned companies.”

Stripe could fit into either of those first two categories: high-quality IPO candidate and/or mature unicorn.

On the other hand, Stripe’s ability to command a $95 billion valuation could make it too expensive to be a viable SPAC target.

InvestorPlace contributor Tom Taulli offered an excellent list of seven potential merger targets for Pershing Square.

I would recommend that any current or prospective PSTH stock owner read that article and consider which acquisition targets are most likely.

But on the other hand, I wouldn’t get too caught up in guessing games. If you believe in Ackman’s ability to pick out the big winners, then an investment in Pershing Square makes sense. It’s really as simple as that.

The Bottom Line

Is it a bad thing that the PSTH stock price has come down from its peak? Actually, it’s an opportunity to accumulate the shares at a more favorable price point.

We can hope that Ackman will ultimately succeed in his unicorn hunt. So, investors should just be patient — there’s no need to throw in the towel on Pershing Square.

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

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.