Bill Ackman, a multibillionaire investor, is making headlines once more with his bold plan to turn Howard Hughes Holdings (HHH) into a “modern-day Berkshire Hathaway.”
The Pershing Square CEO, who is renowned for his audacious strategies and outspoken manner, wants to take the real estate giant private by increasing his stake and offering $85 per share to buy out remaining investors.
Ackman’s vision was inspired by Warren Buffett
“With apologies to Mr. Buffett, HHH would become a modern-day Berkshire Hathaway that would acquire controlling interests in operating companies,” Ackman wrote in a letter to investors.
The hedge fund manager, whose net worth is estimated at $9.2 billion, has long admired Buffett’s strategy of prioritizing long-term competitive advantages over short-term gains.his ambition to emulate the legendary investor’s success.
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The Deal’s Numbers
Pershing Square now owns 37.6% of Howard Hughes. Depending on how many investors accept the buyout offer, Ackman’s group would own between 61% and 69% of the business if the deal closes. Howard Hughes’ stock rose 9.5% after the announcement, closing at $78.62.
Ackman and Howard Hughes have been involved for more than ten years. After saving General Growth Properties, the parent business from which Howard Hughes was split off in 2010, he got involved.
Even though Ackman resigned as board chairman in April 2023, he still has a strong stake in the company’s success.
Howard Hughes: A Superstar in Real Estate
Managing a variety of real estate assets in the United States is a specialty of Howard Hughes Holdings, a division of the real estate investment trust General Growth Properties.
The company’s $3.6 billion portfolio includes mixed-use projects as well as commercial and residential real estate. Ackman’s resolve to take the business private and lead it toward higher profitability has been strengthened by his discontent with the stock’s performance.
The broader strategy of Pershing Square
Pershing Square was established by Ackman in 2004 and consists of a focused portfolio that includes investments in well-known businesses such as Alphabet, the parent company of Google, Hilton, and Chipotle.
The Motley Fool claims that Pershing owns more than 20% of Alphabet’s stock holdings, a decision that has yielded significant profits.
When Ackman quickly purchased Alphabet shares following a decline brought on by early setbacks in Google’s AI project, Bard, it became clear that he was positive on the company.
The total value of Pershing Square’s Alphabet Class A and Class C share holdings as of June 30, 2024, is $2.1 billion. Ackman’s approach has been confirmed by Google Cloud’s 29% revenue growth in the second quarter of 2024 and the effectiveness of its generative AI solutions.
Taking a Cue from Buffett
It’s no secret that Ackman adores Warren Buffett. In 2023, he told CNBC, “I’ve been a kind of Warren Buffett devotee.” Ackman hopes to emulate Berkshire Hathaway’s strategy of acquiring majority shares in successful companies while keeping a lengthy investment horizon by turning Howard Hughes into a diversified holding company.
What Will Happen to Investors Next?
For both present and potential investors, Ackman’s strategy presents an exciting opportunity. He wants to transform Howard Hughes into a Berkshire Hathaway-like behemoth and realize its full potential by taking it private. Investors must decide whether to stick with one of the most innovative hedge fund managers of our time or cash out at $85 per share.