Billionaire Investor Bill Ackman Makes a Bold Move on Howard Hughes Holdings
Bill Ackman, the renowned billionaire investor, is doubling down on his faith in Howard Hughes Holdings (NYSE: HHH), a real estate development company with a diverse portfolio of master-planned communities. Through his fund, Pershing Square Capital Management, Ackman is proposing to purchase a significant amount of the remaining public float, valued at $1 billion, at $85 per share.
A Decade-Long Investment
Ackman’s involvement with Howard Hughes dates back to 2010, when Pershing Square, along with several private equity firms, capitalized the company in a rights offering, valuing shares at $47.62. Although the stock has returned a modest 35% since then, Ackman remains committed to the company’s management and its unique collection of assets.
A New Proposal
Under the proposed transaction, Pershing Square’s holding company would form a new subsidiary to acquire over 11.7 million shares from the outstanding float at $85 per share. Additionally, Pershing would conduct a $500 million share repurchase program at $85 per share for over 5.8 million shares from the public float, financed by new bonds issued by the company. The subsidiary would eventually merge back into Howard Hughes, keeping the same management team in place.
A Significant Premium
The $85 offer represents an 18.4% premium to Howard Hughes’ stock price on January 10 and a 38.3% premium from August 6 of last year. If approved, the deal would increase Pershing’s stake to between 61.1% and 69.2% of outstanding shares.
A Commitment to the Long Haul
Ackman has stated that he intends to hold Howard Hughes stock “forever,” citing the company’s significant embedded upside potential and its position as a pure-play master-planned community company with decades of growth ahead.
A Unique Portfolio
Howard Hughes operates one of the largest portfolios of master-planned communities, covering 101,000 acres across six states. These communities are designed to deliver a mini-town feel with extensive amenities, including retail, residential, and commercial developments.
Unlocking Shareholder Value
Management at Howard Hughes believes the company has been significantly undervalued, with a sum-of-the-parts analysis valuing the company at $118 per share. The recent spin-off of the Seaport assets into the Seaport Entertainment Group is expected to create shareholder value and better position Howard Hughes as a pure-play MPC company.
A Second Look
With Ackman going all in, it may be time for investors to reassess Howard Hughes Holdings. The company’s unique portfolio of assets and potential for long-term growth make it an attractive opportunity for those looking to invest in a company with significant upside potential.
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