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Billionaire investor Bill Ackman unleashed a seismic announcement on Monday: Pershing Square is set to pour an astonishing $1 billion into expanding its stake in Howard Hughes Holdings. At the same time, the real estate giant plans a dramatic $500 million share buyback, signaling a bold new chapter in its evolution.
Ackman said that the deal would make the company a “modern-day Berkshire Hathaway that would acquire controlling interests in operating companies.”
This monumental move is poised to catapult Pershing Square’s ownership of Howard Hughes from 38% to an extraordinary 61%–69%, depending on the number of investors willing to sell. Ackman’s audacious gamble cements his unwavering faith in the developer’s future and marks a defining moment in the battle for dominance in the real estate arena.
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Shares of Howard Hughes, one of Pershing’s longest-held investments, closed 9.5% higher at $78.62 on Monday, reported Reuters.
“Based on our analysis, we believe that HHC is on the path to soon begin to generate substantial excess cash resources above and beyond investments in new property developments and amenities, including the capital expenditures and other investments necessary and desirable to maintain and enhance the continued growth, quality of life, and overall attraction of HHC’s nationally recognized, perennially award-winning Master Planned Communities,” Bill Ackman told Pershing Square investors in a letter.
“In summary, Pershing Square’s management team and resources would be contributed to HHH, and HHH would invest the excess cash and other financial resources of the Company to diversify its business through the acquisition of new operating companies and other assets,” he added. “Importantly, the Pershing Square team also brings expertise in hedging macro and other risks, capabilities that can be used to help mitigate HHC’s real estate and MPC businesses’ exposure to interest rate risk, commodity price risk (due to its large Houston real estate exposures), as well as other market, economic, and geopolitical risks.”
“With apologies to Mr. Buffett, HHH would become a modern-day Berkshire Hathaway that would acquire controlling interests in operating companies,” Ackman said, addressing rival investor Warren Buffet.
However, Ackman also said that, “We, like other long-term shareholders and this board, have been displeased with the company’s stock price performance.”
Bill Ackman is the founder and CEO of Pershing Square Capital Management, a hedge fund management company with over $16 billion in assets under management. He is known for his activist investing approach, which involves taking large stakes in companies and pushing for changes in their management or strategies.
Ackman is a graduate of Harvard University, earning both his bachelor’s and MBA degrees from the prestigious institution and has an estimated net worth of about $4 billion. Bill Ackman has also been involved in philanthropy and social activism. He has donated to various causes and recently became more vocal about combating anti-Semitism.