Howard Hughes - A Deeper Dive
Investors doubt Ackman and his plan. Their doubt is our opportunity.
This is a direct continuation of my recent article, “Howard Hughes: Berkshire Hathaway 2.0 or The World According to Ackman,” and I will assume you have read the latter and proceed without further introduction.
That said, I have to address an obvious question: why spend so much time on something that’s still a work in progress rather than a fully formed, proven enterprise?
It may not be unlike investing in Apollo before its merger with Athene is closed. The best opportunities often emerge before the story is complete, when the market has yet to grasp the full potential. At the same time, the risk-reward here is highly asymmetric - if Ackman is unsuccessful in transforming Howard Hughes ($HHH), the stock will likely remain where it is today, as we’ll see shortly. On the contrary, if he is successful, we may harvest spectacular long-term compounding. This venture is Mr. Ackman’s most ambitious — an attempt to build a legacy à la Buffett, by which he’ll be judged in his old age. If you allow me a heretical thought—it might even go beyond money itself, though not entirely so.
Secondly, as will become evident shortly, the transformation is already advanced and less dependent on an insurance acquisition than it seems.
Finally, HHH will report its Q3 on November 10. There is a slight chance that we will see some signs of the new strategy on this day, well before any announcements of insurance acquisition. I will elaborate on this in due course, but note a message in Pershing Square’s semiannual report, issued on August 20, 2025 (the emphasis is mine):
As part of the transaction [with Howard Hughes Holdings], we have committed to make available the full resources of Pershing Square to the company in exchange for a base and incentive management fee….
In May, Bill [Ackman] stepped down from the Board of UMG [Universal Music Group - one of Pershing Square’s holdings] due to increasing demand on his time from his other Pershing Square commitments, including his recent appointment as Executive Chairman at Howard Hughes Holdings.
It’s easy to dismiss this verbiage as a routine figure of speech, but I believe the opposite is true: HHH is fast becoming the central fulcrum of Mr. Ackman’s activities. And negotiating with the insurance acquisition target(s) is but one line of action.
If we see positive changes on November 10, the shares may duly respond.