Bill Ackman Offers $1B For Real Estate Giant Howard Hughes To Emulate Berkshire Hathaway

According to the New York Post. According to the New York Post, creating “a modern-day Berkshire Hathaway” is no mean feat, but that’s exactly what billionaire investor and hedge fund manager Bill Ackman intends to do. The Pershing Square CEO plans to increase his stake in real estate company Howard Hughes Holdings and take the company private. 

Ackman said in a letter to investors that Pershing currently holds a 37.6% stake in HHH and plans to offer $85 a share to buy out the rest of the firm.

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Emulating The Buffet Playbook

“With apologies to Mr. Buffet, HHH would become a modern-day Berkshire Hathaway that would acquire controlling interests in operating companies,” Ackman, 58, who has a net worth of $9.2 billion, wrote. 

Following the news, Howard Hughes shares increased 9.5% to $78.62. Ackman has been involved with the real estate company for a decade and only stepped down from its board in April after serving as its chairman since 2010.

“We, like other long-term shareholders and this board, have been displeased with the company’s stock price performance,” Ackman said in the letter, according to Reuters. When the deal is complete, it would increase Pershing Square’s stake in Howard Hughes to somewhere between 61% and 69%, depending on how many investors agree to be bought out from the 38% it currently holds.

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The Roots Of Howard Hughes

Howard Hughes was an offshoot of real estate investment trust General Growth Properties, forming its own entity in 2010. It owns and manages various types of US real estate, including commercial, residential and mixed-use. It has a market value of $3.6 billion. 

Ackman formed Pershing Square in 2004. One of his most notable moves was the rescue of mall operator General Growth Properties, from which he became involved in Howard Hughes. According to Forbes, Pershing Square’s stock portfolio is concentrated in seven companies, including Chipotle, Hilton and Google parent Alphabet, the latter of which he has over 20% of its stock invested, according to The Motley Fool. Ackman is notable amongst other fund managers because of his large social media following with over a million followers on X. 

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A Shrewd Gamble On Alphabet

Ackman has been bullish on Google’s parent company, Alphabet. When Google’s answer to ChatGPT, Bard, stumbled and the share price dropped, Ackman began aggressively buying stock. His Pershing Square hedge fund owns class A and class C shares of the tech giant worth roughly $2.1 billion as of June 30, 2024. It was a prescient move. In the second quarter of 2024, Google Cloud revenue increased 29% to $10.3 billion. Its operating income almost tripled year over year to $1.17 billion. Alphabet CEO Sundar Pichai said in the Q2 earnings call that his company’s generative AI solutions “have already generated billions in revenues and are being used by more than 2 million developers.”

In emulating Berkshire Hathaway with his Howard Hughes purchase, Ackman is again carefully treading in Warren Buffet’s footsteps. Preferring to look at a company’s enduring competitive advantage over short-term stumbles is a classic Berkshire Hathaway move. Ackman has been quite open about sticking to the Buffet playbook. “I’ve been a kind of Warren Buffett devotee,” he told CNBC in 2023. “He’s been my unofficial mentor for many years.” 

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