Bill Ackman is taking a major step toward transforming his Pershing Square Capital Management hedge fund firm into a diversified holding company by upping his stake in real estate developer Howard Hughes Holdings (HHH) to 46.9% with an additional $900m investment in the business, according to a report by Reuters.
The move, announced on Monday, marks a significant evolution in Ackman’s long-term vision to build a modern-day equivalent of Berkshire Hathaway, leveraging Howard Hughes as a platform for long-duration, control-oriented investments in smaller businesses.
Ackman’s hedge fund, known for its concentrated, high-conviction bets, will now take a more hands-on role at Howard Hughes. Ackman will return to the board as executive chairman, while Pershing Square partner and CIO Ryan Israel will assume the role of chief investment officer at the real estate company.
“HHH is a superb platform to build a faster-growing, high-returning holding company that will acquire control of companies that meet Pershing Square’s criteria for business quality and durable growth,” said Ackman, whose firm has long favoured businesses with defensible moats and strong cash flow generation.
The enhanced position comes just days after Warren Buffett – Ackman’s longtime investing role model – announced plans to step down from the helm of Berkshire Hathaway.
While Pershing Square will continue its core hedge fund strategy of taking large minority stakes in large-cap public companies, Ackman has emphasised that Howard Hughes will pursue a complementary mandate – acquiring control positions in smaller, private businesses.
Though Pershing Square’s ownership in Howard Hughes nears majority control, governance checks are in place. The firm has agreed to cap its voting power at 40% and limit beneficial ownership to no more than 47%, aiming to ease concerns among minority shareholders after a previously rejected buyout proposal.
Ackman’s increased investment follows a tense episode earlier this year, when Howard Hughes’ board rebuffed his earlier offer to acquire 10 million shares for $900m, deeming the terms “not acceptable in its current form.”
Despite the friction, the company’s leadership, including CEO David O’Reilly, will remain in place with expanded responsibilities. Day-to-day operations and staff roles will remain unchanged.
