Bill Ackman's fund buys stocks of Howard Hughes, real estate developer
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Bill Ackman increases his position on the shares of a great developer. Such a move of the old fox probably does not bode a crisis on the real estate market?
Pershing Square Capital Management fund, whose founder is the famous Bill Ackman, buys shares of developer Howard Hughes. This is not only an expression of faith in this particular company, but also a signal that there should be no Armageddon on the real estate market.
A developer in trouble but with strong foundations
Howard Hughes is a huge real estate developer that has lost a quarter of its valuation in 2022 and has some fundamental problems. This can be seen in the behavior of the share price, which fell by -40% in 5 years, while the S&P500 index grew by 42%.
It was speculated that Pershing Square might acquire Howard Hughes in its entirety, i.e. purchase a majority of the shares and take control. For now, the Pershing Square fund bought up Hughes' shares in early December, increasing its stake to over 31%.
Pershing Square paid $3.8 million for 51,452 Howard Hughes shares, at an average price of $74.56. As filed with the Securities and Exchange Commission (SEC), the fund currently holds 15.9 million shares of Howard Hughes.
Until recently, analysts were quite optimistic about Howard Hughes. The average recommendation says "buy" and the average price target is as high as $100, with the current market price of $78.30. However, on December 9, Morgan Stanley analyst Anthony Paolone lowered his Howard Hughes stock price target to $95 from $104 and lowered his earnings estimate, albeit maintaining an "overweight" rating for the company's stock.
"Our thesis is that the Howard Hughes properties are located in places with strong foundations of long-term demand. The management has performed better than expected and the shares are cheap," Paolone stated in his report.
Howard Hughes Financial Results
Source: Barron's
HHC quotes against the background of the S&P500
Source: TradingView
Ackman Fund Lost Nearly 10% in 2022
Let's take a look at the performance of the Pershing Square fund . In 2022, the valuation of his unit went down by -8.8%. Since its inception, it has earned 211%. It has $12.2 billion in assets. There are 9 longs in his portfolio . From the beginning of January to mid-August, he earned the most interest rate swap positions in the US. Universal Music and Netflix lost the most.
Pershing Square Portfolio Retention
Source : Pershing Square
Keeping Pershing Square Holdings and Pershing Square (PSLP) on against the backdrop of the S&P 500
Source: Pershing Square
