Bill Ackman’s Berkshire Hathaway fever dream
Bill Ackman’s plan to become baby Buffett
Bill Ackman has a lot of balls in the air.
A few years ago he invented Pershing Square SPARC Holdings, a listed “special purpose acquisition rights” company aimed at eventually taking a large prominent company such as Elon Musk’s X or SpaceX public.
Ackman also wants to take his hedge fund Pershing Square public and last year attempted to raise a $25bn fund in the US.
Now the billionaire investor is taking his dreams a step further, stating on Monday that he plans to recreate his own Berkshire Hathaway from a hodgepodge of real estate assets that have languished on public markets for a decade.
On Monday, Ackman unveiled a more than $1bn deal for Pershing Square to take control of Howard Hughes Holdings, a real estate developer he created in 2012 from the carcass of mall operator General Growth Properties.
Under his control, Ackman aims to turn Howard Hughes into an acquisition vehicle that uses its cash flows and balance sheet to buy other public and private companies.
Ackman said the gambit was part of his efforts to build a “modern-day Berkshire Hathaway”.
The billionaire investor has always dreamt big and promised epic returns from his financial alchemy.
A decade ago, he fixated on “platform companies”, where an acquisitive chief executive could conjure blistering returns from flipping companies. Unfortunately, during that obsession he bet billions on Valeant Pharmaceuticals. But instead of a 45x return, Pershing Square lost billions.
Now an ascendant keyboard warrior on X and vocal backer of president-elect Donald Trump, Ackman is aiming to seize the moment by transforming Pershing Square into a large financial group with the capacity to compete with powerful private equity buyers on large takeovers, starting with his takeover of Howard Hughes.
Afterwards, he aims to revive his US fundraise, which was pulled last year after raising less than 10 per cent of the $25bn Ackman targeted, and eventually will take his firm public.
It all sounds exciting on paper, but Ackman has a history of coming up short.
Can Howard Hughes really generate much cash? It hasn’t for its decade-long history. It’s even unclear if Howard Hughes shareholders will accept Ackman’s $85-per-share purchase price.
In a presentation on Monday, Ackman pointed to Pershing Square’s “long-term track record in raising equity capital from institutional and retail investors”, and mentioned a record-sized $4bn acquisition vehicle he raised in 2020.
Left unsaid was that the vehicle was unwound two years later due to regulatory complications — just another in a long line of Ackman dreams left unfulfilled.