Billionaire Ackman to build ‘modern-day Berkshire’
Billionaire Bill Ackman aims to create a “modern-day Berkshire,” a reference to the investment company of Warren Buffett, using the real estate developer Howard Hughes Holdings (HHH) as the foundation. Ackman’s hedge fund, Pershing Square, has proposed acquiring additional shares of HHH at a premium and merging it with a new subsidiary. Following this announcement, HHH shares surged nearly 10% yesterday, Monday, January 13, Tuesday, and continued climbing today.
Details
Bill Ackman’s hedge fund, Pershing Square Capital Management, has offered to buy additional shares of HHH and merge the developer with its new unit, Pershing Square Holdco, according to documents HHH filed with the U.S. SEC. Ackman envisions the deal creating a company akin to Berkshire Hathaway, the legendary investment outfit led 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 the HHH board of directors.
Under the offer, Pershing Square would become the majority owner of the developer, versus approximately 37.6% currently. HHH shareholders would have the option of either selling their shares for cash at $85 apiece or rolling them over into the merged company. This price represents an 18% premium to the HHH closing price on Friday, January 10, when the offer was made.
“While we are pleased with the substantial business progress Howard Hughes Holdings has made over the more than 14 years since it went public, we, like other long-term shareholders and this board, have been displeased with the Company’s stock price performance,” Ackman explained in the letter.
Ackman noted that over the 14 years of holding HHH shares, Pershing Square has achieved a total return of approximately 35.0%, or a 2.2% compound annual return. He also highlighted that HHH has never paid dividends.
HHH will evaluate the offer and determine the appropriate course of action and process, though there is no guarantee it will accept the proposal.
Stock performance
HHH shares have reacted positively to the news. Today, January 14, they jumped approximately 2% shortly after the market opened. The day before, following the publication of the HHH SEC filing, the stock surged nearly 10% to close at $78.62 per share.
Over the last 12 months, HHH shares are up only 3.0%. Compared to mid-December 2024, however, they are now 0.7% lower.
Context
This is not Ackman’s first attempt to influence HHH’s business, which is focused on building homes, offices, and retail spaces. In August 2024, Pershing Square sent a letter to the HHH board stating that it was evaluating its investment in the company. One option under consideration was to acquire all or nearly all of HHH shares and take the company private.
At the time, HHH announced that it had formed a special committee to review Pershing Square’s proposals and evaluate them against other strategic alternatives.
Analyst insights
HHH has only two analyst ratings, both “buys,” according to MarketWatch. The average target price is $95 per share, indicating 20% upside from the most recent closing price.
