Billionaire Investor Bill Ackman’s Bold Move to Create a Modern-Day Berkshire Hathaway
Bill Ackman, the billionaire investor and hedge fund manager, is making a bold move to create a modern-day Berkshire Hathaway by increasing his stake in real estate company Howard Hughes Holdings and taking the company private.
A Decade-Long Involvement
Ackman has been involved with Howard Hughes for over a decade, serving as its chairman since 2010. He stepped down from the board in April, but his involvement with the company has not wavered. In a letter to investors, Ackman expressed his disappointment with the company’s stock price performance, stating that he, along with other long-term shareholders and the board, have been displeased with the results.
A $1 Billion Offer
Ackman’s Pershing Square currently holds a 37.6% stake in Howard Hughes and plans to offer $85 a share to buy out the rest of the firm. This would increase Pershing Square’s stake in Howard Hughes to between 61% and 69%, depending on how many investors agree to be bought out.
Emulating Berkshire Hathaway
Ackman’s move is reminiscent of Warren Buffett’s strategy, where he acquires controlling interests in operating companies. Ackman has been open about his admiration for Buffett, stating that he has been a “kind of Warren Buffett devotee” and has followed the Berkshire Hathaway playbook.
A Diversified Portfolio
Pershing Square’s stock portfolio is concentrated in seven companies, including Chipotle, Hilton, and Google parent Alphabet. Ackman has been bullish on Alphabet, aggressively buying stock when Google’s answer to ChatGPT, Bard, stumbled and the share price dropped. His Pershing Square hedge fund owns class A and class C shares of Alphabet worth roughly $2.1 billion as of June 30, 2024.
A Focus on Enduring Competitive Advantage
Ackman’s strategy is focused on a company’s enduring competitive advantage over short-term stumbles, a classic Berkshire Hathaway move. He has been careful in his approach, preferring to look at the long-term potential of a company rather than its short-term performance.
A New Era for Howard Hughes
If the deal is completed, Howard Hughes would become a modern-day Berkshire Hathaway, acquiring controlling interests in operating companies. This would mark a new era for the real estate company, which has a market value of $3.6 billion and owns and manages various types of US real estate, including commercial, residential, and mixed-use properties.
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