(Bloomberg)—Billionaire Bill Ackman said real estate group Howard Hughes Corp. -- one of the longest-held investments of his activist hedge fund Pershing Square Capital Management -- is an attractive buy right now.
“I think this is one of the most attractive times in the history of the company to invest,” Ackman said Monday at the Sohn Investment Conference in New York. “The stock trades at one of the widest discrepancies between the underlying net asset value, and we have a much better understanding of the business, and the business has had a huge head start over the last six years.”
Pershing Square is the largest single shareholder in Howard Hughes, the owner of real estate including master-planned communities that Ackman helped spin off from General Growth Properties Inc. as it exited bankruptcy in 2010.
Howard Hughes has adopted the principles of Donald Bren’s successful Irvine Co., Ackman said. These include being the sole owner and long-term steward of the land, releasing plots for sale judiciously under a thoughtful master plan, and maintaining a conservative balance sheet, Ackman said.
Ackman helped rescue General Growth from near-collapse by pushing it to file for bankruptcy in 2009, and was part of an investor group in its subsequent reorganization. The spun-off Howard Hughes, based in Dallas, owns real-estate developments including in New York’s South Street Seaport, The Woodlands in Texas, and Summerlin near Las Vegas.
Pershing Square has two as-yet undisclosed long investments that may become activist campaigns, Ackman said May 2 in a Bloomberg Television interview with Francine Lacqua. He didn’t mention any other holdings in his near-20 minute presentation Monday.
“These are large-cap companies, very high-quality businesses, they’ve both done very well over a long period of time,” Ackman said in the May 2 interview about his mystery bets. “But we think they’ve under achieved their potential, they’ve not been optimized in terms of the way they’re operated, and we think there are changes that could be made to make the businesses more valuable.”
Last week, Ackman listed his publicly traded fund Pershing Square Holdings Ltd. in London in a bid to attract more investors and reduce the discount to net asset value it currently trades at in Amsterdam. He also began a share buyback of the fund, pointing out that investors can purchase the public stock at about a 15 percent discount to the value of the securities it holds.
Pershing Square typically buys large stakes in a handful of big companies and agitates executives and directors to make changes to boost shareholder returns. In October 2014, Pershing Square Holdings began trading in Amsterdam with the same portfolio as the hedge fund.
Ackman’s firm in March exited a high-profile investment in Valeant Pharmaceuticals International Inc., calling the effort at the controversial drugmaker a “huge mistake” that cost $4 billion.
Last year, Pershing Square disclosed a new stake in burrito chain Chipotle Mexican Grill Inc. and exited investments in animal-health company Zoetis Inc. and longtime holding Canadian Pacific Railway Ltd.
The New York-based investment firm also owns stakes in fast-food chain holding company Restaurant Brands International Inc., snack maker Mondelez International Inc., European frozen food group Nomad Foods Ltd., industrial gas distributor Air Products & Chemicals Inc. and chemical maker Platform Specialty Products Corp.
Pershing Square is fighting with the U.S. government over its stake in bailed-out mortgage backers Fannie Mae and Freddie Mac. Ackman has an ongoing short position against nutrition-products group Herbalife Ltd., which he has called a pyramid scheme.
--With assistance from Simone Foxman and Katia Porzecanski.To contact the reporter on this story: Beth Jinks in San Francisco at [email protected] To contact the editors responsible for this story: Elizabeth Fournier at [email protected] Josh Friedman, Alan Mirabella
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