Billionaire Bill Ackman’s hedge fund, Pershing Square, has spent nearly $1 billion to accumulate shares of one real estate development firm.
Perishing Square has poured $900 million into buying 9 million shares of Howard Hughes Holdings (HHH).
Ackman’s fund paid a premium of 48% compared to HHH’s closing stock price last Friday and now controls 46.9% of the real estate firm’s shares, per a new press release.
Ackman, who has been named the executive chairman of the HHH board of directors, says the investment will help expand HHH into a diversified holding company.
“HHH has built substantial value for shareholders in recent years that has largely gone unrecognized due to the high cost of capital that the market assigns to the Company in light of its pure-play exposure to real estate development and community creation. We believe that 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.”
In an interview with Yahoo Finance, Ackman noted he made the investment with eyes toward following in the footsteps of legendary investor Warren Buffett.
“The story begins arguably when I began my career. Very early on, Warren Buffett, Berkshire Hathaway letters, beginnings of my investment education. And the story of Berkshire Hathaway, Buffett buying basically control of a textile business and then transforming it over time into a diversified holding company.”
Ackman says “the ultimate investment dream” is to have a public company built with permanent capital.
“You can follow investment principles and build a business of significance. And that’s what Warren has achieved, that’s what we hope to achieve with Howard Hughes.”
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