Billionaire investor Bill Ackman, through his hedge fund Pershing Square Capital Management, has made a significant move by investing $900 million in Howard Hughes Holdings Inc. (NYSE: HHH), increasing his stake to 46.9% and positioning the real estate developer as a platform for a diversified holding company modeled after Warren Buffett’s Berkshire Hathaway. The announcement, made on Monday, sent Howard Hughes’ stock surging nearly 3% in trading, closing at $69.40.
The deal involves Pershing Square acquiring 9 million newly issued shares of Howard Hughes at $100 per share, a 48% premium over the stock’s closing price the previous Friday. Ackman, who has rejoined the company as executive chairman, aims to transform Howard Hughes from a real estate-focused developer into a conglomerate that acquires controlling stakes in high-quality, durable growth companies across various industries. Pershing Square’s chief investment officer, Ryan Israel, will also take on the role of chief investment officer at Howard Hughes, signaling a strategic alignment between Ackman’s hedge fund and the company’s new direction.
Howard Hughes Holdings, headquartered in The Woodlands, Texas, is known for developing master-planned communities in states like Texas, Hawaii, and Nevada. The company, which traces its roots to land acquired by Howard Hughes in the 1950s, has been a long-term focus for Ackman, who served on its board for over a decade before stepping down as chairman last year. His renewed commitment includes plans to maintain the company’s core real estate operations while pursuing acquisitions in sectors such as insurance, a strategy reminiscent of Berkshire Hathaway’s diversified portfolio.
“We believe HHH is a superb platform to build a faster-growing, high-returning holding company,” Ackman said in a statement, emphasizing Pershing Square’s criteria for investing in businesses with strong growth potential. He noted that the company’s real estate operations, led by CEO David O’Reilly, will continue to generate cash over time, which can be reinvested into new ventures without diverting funds from its master-planned communities.
The investment follows months of negotiations, with Ackman initially proposing a deal in February 2025 that was deemed “not acceptable” by Howard Hughes’ board. The finalized agreement caps Pershing Square’s voting power at 40% and limits its beneficial ownership to 47%, ensuring a balance of control. Additionally, Pershing Square reduced its annual management fees from a proposed $60 million to $15 million, with further fees tied to equity growth, a move praised by analysts like JPMorgan’s Anthony Paolone, who set a target price of $82 for the stock.
Market reactions have been largely positive, with Howard Hughes’ stock jumping as much as 14% in premarket trading on May 5. Analysts see Ackman’s involvement as a transformative shift, with some projecting a 34.39% upside potential for the stock, ranking it second among Ackman’s holdings for growth prospects. However, challenges remain, including the company’s $5.2 billion debt load, with $425 million maturing in 2025, which could complicate refinancing efforts.
Ackman’s vision for Howard Hughes has drawn comparisons to Buffett’s conglomerate, though with a market capitalization of $3.4 billion, the company is far from Berkshire Hathaway’s $1.2 trillion valuation. Ackman addressed this on CNBC, stating, “Howard Hughes as a real estate company today is not going to throw off a lot of cash, but five years from now, ten years from now, it’s going to produce more cash that it can generate.” He also expressed openness to building or acquiring an insurance company, a nod to Berkshire’s insurance-driven cash flow model.
As Howard Hughes Holdings embarks on this ambitious pivot, investors and analysts are watching closely to see if Ackman can replicate Buffett’s success. For now, the $900 million investment signals confidence in the company’s potential to evolve beyond its real estate roots into a diversified powerhouse.