Bill Ackman Seeks to Transform Howard Hughes into a Modern-Day Berkshire Hathaway

Bill Ackman, founder of Pershing Square Capital Management, has made a bold move with a proposal to acquire 10 million newly issued shares of Howard Hughes Corporation at $90 per share. This marks an increase from his previous offer of $85 per share in January. The announcement aims to reshape Howard Hughes into a "modern-day" Berkshire Hathaway, taking inspiration from Warren Buffett's successful career trajectory. If the deal goes through, Ackman will assume the roles of chairman and CEO.

The proposal comes at a time when Howard Hughes' stock had surged by 6.8%, closing at $80.60 in anticipation of this significant news. However, following the announcement, shares fell nearly 5% in extended trading. Should the acquisition be successful, Ackman’s firm would own 48% of Howard Hughes, granting him substantial control over the company’s future.

Ackman's vision for Howard Hughes involves continuing to develop and manage master planned communities (MPCs) such as The Woodlands in Houston and Summerlin in Las Vegas. These communities are seen as long-term investments poised for growth in pro-business markets.

"Owning small and growing MPCs that will eventually become large cities in the best pro-business markets in the country is a great long-term business," said Ackman.

The proposed acquisition draws parallels to Warren Buffett's early career path. Buffett began as an activist investor and hedge fund manager before closing his partnerships and taking control of a struggling textile business, Berkshire Hathaway, in the 1960s. Ackman aims to replicate this model by leveraging the resources of Pershing Square to build a diversified holding company.

"We will make available the full resources of Pershing Square to HHH to build a diversified holding company, or one could say, a modern-day Berkshire Hathaway," stated Ackman.

Berkshire Hathaway is now valued at $1 trillion, with interests spanning various industries. Ackman’s ambition is to see Howard Hughes follow in these footsteps by becoming a significant player under his leadership.