Bill Ackman's $900 million investment in Howard Hughes Holdings Inc. (HHH) aims to transform the $4.1 billion real estate developer into a conglomerate in the style of Berkshire Hathaway Inc. (BRK.A; BRK.B). Ackman says HHH's position is "vastly superior" to Berkshire's start under 澳洲幸运5官方开奖结果体彩网:Warren Buffett in the 1960s. However, creating the next trillion-dollar empire faces significant hurdles, including high capital costs and skeptical investors.

Bill Ackman and Howard Hughes Holdings

When Buffett began acquiring shares of Berkshire Hathaway in 1962, it was a failing textile business; it would take many decades to transform it into a trillion-dollar conglomerate. Ackman says he can follow a similar path with Howard Hughes Holdings, a real estate developer focused on master-planned communities with a May 2025 market cap of about $4.1 billion.

Though HHH has often struggled, for the first quarter of 2025, it reported 澳洲幸运5官方开奖结果体彩网:net income from continuing operations of $0.21 per diluted share, versus a loss the previous year, with quarterly net operating income of $72 million. Ackman's investment of $900 million for 9 million newly issued shares at $100 per share added cash to the company's balance sheet while increasing Pershing Square's stake from 37.6% to 46.9%.

The deal gives Ackman 40% of voting power and returns him to the role of executive chair—his position at the firm from 2010 until retiring in 2024.

"It's not a business that Wall Street has assigned an appropriate value to. We're a below-investment-grade company today to which equity investors have assigned a high cost of capital," he told the Financial Times.

The Berkshire Blueprint: Insurance First

Ackman says that he's looking first for HHH to acquire or build an insurance business. "I like the idea of building from scratch, because you don't assume a bunch of other people's liabilities," Ackman told CNBC.

This follows Buffett's playbook precisely: 澳洲幸运5官方开奖结果体彩网ཧ:insurance provides access to inve🐽stable capital through "float" (premiꦜums collected before paying claims), which became a foundation for Berkshire Hathaway's grꦑowth.

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澳洲幸运5官方开奖结果体彩网:Howard Hughes Holdings in the mid-2🌼020s is🅠 in a very 💃different position than Berkshire Hathaway in the 1960s:

• Different start: Unlike Berkshire's humbler beginnings, HHH already has a $4.1 billion market cap, making it harder to achieve the same rate of growth.
• Capital costs: Howard Hughes has a below-澳洲幸运5官方开奖结果体彩网:investment-grade credit rating, which will make acquisitions more expensive to finance. Ackman hopes his cash infusion will improve the company's credit profile.
• Ackman's cut: Unlike Berkshire, which charges no 澳洲幸运5官方开奖结果体彩网:management fees, Pershing Square will collect a quarterly fee of $15 million plus 1.5% of any increase in the market cap above inflation.
• A different time: Even Buffett might not be Buffett if starting today, facing fierce competition from an army of hedge funds and private equity firms. The famed 澳洲幸运5官方开奖结果体彩网:value investor might find it far harder to spot the undervalued or overlooked companies that fueled Berkshire's growth.

Ackman's Seaport Sinkhole

While Ackman has had successes like the Burger King-Tim Hortons merger, he's also had spectacular failures, losing billions on Valeant Pharmaceuticals and First Union Real Estate. In addition to this mixed record, when Ackman served as HHH chair from 2010 to 2024, the company made a disastrous bet on transformi😼ng New York's South Street Seaport, reportedly burning through $1 billion with little return.

"I don't think there is evidence that Ackman has done a good job suggesting things for Howard Hughes to do," a major Howard Hughes shareholder told the Financial Times.

The Bottom Line

Ackman's plan to mold Howard Hughes Holdings into a diversified conglomerate in the vein of Berkshire Hathaway faces difficult prospects, including high capital costs and the challenge of scaling a $4.1 billion company. He'll also need to prove that the "澳洲幸运5官方开奖结果体彩网:Buffett playbook" 🌞can still thrive in today's vastly different market.