Howard Hughes Corporation has long been an outlier in Bill Ackman’s portfolio. Unlike his usual large-cap investments, HHC is an undervalued real estate business with long-term potential that public markets have struggled to appreciate. But for Ackman, this company isn’t just another real estate play—it’s the foundation of a much bigger vision.
In 2008, during the financial crisis, General Growth Properties (GGP)—the second-largest U.S. mall owner—collapsed from $63 to $0.34 per share, a 99.5% decline. Despite this, the business fundamentals remained strong. “That’s sort of an interesting contradiction,” Ackman noted on The World According to Boyar podcast.
GGP’s issue wasn’t performance—it was debt. With $27 billion in liabilities, much of it maturing within two years, markets assumed bankruptcy was inevitable. But Ackman saw a recovery opportunity. “The assets are worth more than liabilities. Isn’t the hierarchy of claims in bankruptcy supposed to work that way?”
Pershing Square acquired 25% of GGP at an average of $0.60 per share, betting on its long-term value. The investment proved to be one of Ackman’s greatest, yielding nearly 100x returns.
As part of GGP’s restructuring, Howard Hughes Corporation (HHC) was spun off, holding a mix of master-planned communities and land assets. Initially, HHC stock soared from $47 to $150, with speculation it could become “the next Berkshire Hathaway.” But enthusiasm faded, and the stock languished.
HHC has consistently traded at a 40% discount to its estimated net asset value. The reason? “It’s like a 50-year story in a public market that wants to know how you’re going to do next quarter,” Ackman explained. External factors—rising interest rates, mortgage concerns, and weak office demand—further pressured the stock.
In August 2023, Ackman attempted to take HHC private but couldn’t secure financing. Instead, Pershing Square increased its stake to 48%, signaling a new strategy.
Rather than keeping HHC as a pure real estate company, Ackman envisions something bigger: “I’ve always had this ambition to build a rival, if you will, to Berkshire Hathaway.”
With HHC as the base, he plans to acquire non-real estate businesses, following Buffett’s model of long-term compounding. He and key Pershing Square executives are taking executive roles to lead this transformation.
You can listen to the entire interview here:
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