Bill Ackman's Diversification Strategy: Howard Hughes and Pershing Square
Billionaire investor Bill Ackman's plans to transform Howard Hughes Holdings into a diversified holding company will not alter his investment portfolios' approach to acquiring company shares.
Ackman's flagship fund, Pershing Square Holdings, will continue its focus on acquiring significant stakes in major companies. Conversely, Howard Hughes will invest in controlling interests of smaller businesses.
"These are distinct worlds," Ackman explained, emphasizing the viability of pursuing both strategies concurrently.
Ackman, once a corporate activist known for influencing companies like Canadian Pacific, is now transitioning his hedge fund firm, Pershing Square Capital Management, into a multifaceted financial conglomerate. Following his retirement from activism three years ago, he has dedicated himself to establishing a modern-day version of Berkshire Hathaway.
Under the revised Howard Hughes proposal, Ackman intends to invest $900 million, increasing his stake to 48% from 37.6%. He will also assume the role of CEO after over a decade with the company, having previously served as chairman until his departure last year.
In a conference call, Ackman stated that the transformed Howard Hughes will provide a permanent home for promising small businesses. "You are critical to our vision," he said, assuring investors that acquired interests would not be sold off in the short term.
A year ago, Ackman initiated a new fund aimed at providing US investors access to the double-digit returns of Pershing Square Holdings. However, the launch of Pershing Square USA was halted days before its planned trading debut on the New York Stock Exchange, as Ackman reduced the fundraising target from $25 billion to $2 billion.
Ackman has indicated his intention to pursue an initial public offering for the fund in the future and has consulted with bankers to gauge interest. However, he remains focused on finalizing the Howard Hughes transaction as his highest priority.