Bill Ackman first became aware of Warren Buffett at the age of 20. Four years later, he read his first Berkshire Hathaway shareholder letter, which profoundly influenced him. The hedge fund manager recalled being inspired to pursue a career in investing.
After three decades and accumulating billions, Ackman is taking significant steps to emulate Buffett’s approach. He shared in a February post that he aspired to build a diversified holding company similar to Berkshire, with an exceptional long-term record.
On May 5, Pershing Square Capital Management, led by Ackman, announced a $900 million agreement to purchase 9 million newly issued shares of Howard Hughes Holdings. Ackman aims to develop the company into a “modern-day version of Berkshire.”
In 1965, Warren Buffett, a legendary investor, acquired control of Berkshire Hathaway, a struggling textile manufacturer at the time. He gradually phased out the textile operations and invested heavily in insurance, utilities, retailing, and other sectors.
Ackman stated that their starting point would not be a declining textile company but a strong business. He expressed intentions to adopt long-term, shareholder-oriented principles similar to Berkshire, with plans to maintain the stock indefinitely.
Ackman manages a highly concentrated portfolio, typically holding between eight to twelve stocks concurrently.
Ackman had been negotiating the deal for several months. Initially, he proposed acquiring 10 million shares for $900 million in February, which Howard Hughes initially rejected, deeming it “unacceptable in its current form.” The final agreement involved investing $900 million for 9 million shares instead.
As per a statement, the agreement will increase Pershing Square’s stake in Howard Hughes from 37.6% to 46.9%. Ackman noted that Howard Hughes has generated substantial shareholder value in recent years, which has largely gone unrecognized due to the market’s high capital cost assignment based on its real estate focus.
The deal includes Pershing Square providing Howard Hughes with investment, advisory, and other services, including assistance with deals, capital markets, and risk hedging. Howard Hughes will pay a quarterly base fee of $3.75 million, plus a 0.375% fee on any market cap increase above a reference value.
Ackman, who served on Howard Hughes’ board for over a decade, recently returned as executive chairman, with Ryan Israel of Pershing Square taking on the role of chief investment officer. Led by CEO David O’Reilly, Howard Hughes’ current leadership will remain unchanged.
Pershing Square’s ownership in Howard Hughes will be limited to 47%, with voting rights capped at 40%.
Howard Hughes’ stock rose by 2.86% following the announcement on May 5, although the stock remains down over 8% year-to-date.
Ackman, known for his reputation as an activist investor, famously profited by $2.6 billion from overhauling Canadian Pacific Railway between 2011 and 2016. However, not all investments were successful; he lost over $1 billion shorting Herbalife in 2018. By 2022, he stated that he was finished with activist short-selling, describing it as the “noisiest form of activism.”
Ackman now runs a highly concentrated portfolio, typically maintaining eight to twelve stocks. In April, he disclosed that Pershing Square began acquiring Hertz stock late last year, now owning 19.8% of it. Also, in February, he mentioned accumulating 30.3 million Uber shares.
In the fourth quarter of 2024, Ackman purchased 2.5 million shares of Nike, marking it his most significant buy that quarter. He initiated a position in Nike mid-2024 and added 13.2 million more shares in Q3, despite the stock’s 30% decline that year.
Additionally, in Q4, Ackman acquired 2.1 million shares of Brookfield Corp., a Toronto-based real estate and infrastructure firm, and 2.9 million shares of Seaport Entertainment, a company spun off from Howard Hughes in 2024.