Warren Buffett's Berkshire Hathaway (BRK.A) is one of the most important companies in the world today, managing more than $1 trillion in industry investment. Few people know that the investment powerhouse is a struggling textile company, acquired by Buffett in 1962. Buffett was a hedge fund manager at the time, and in the late 1950s, Berkshire Hathaway was worth in the late 1950s, even though it was closing factories and firing workers. He bought most of the shares, provided much needed capital, and slowly turned it into a diversified holding company.
Fast forward half a century, Bill Ackman, the billionaire hedge fund manager behind Pershing Plaza Capital Management, hopes to replicate Buffett by creating the “Modern Berkshire Hathaway” success. The $900 million he offered to buy shares at Howard Hughes Holdings, a Texas-based real estate company, which has built large residential communities called the main plan community (MPC). Howard Hughes has a market capitalization of $3.6 billion in its field.
“It's much better than a dying textile company,” Ackerman said in a post yesterday (February 18). “Owning a small MPC [master-planned communities] It is a great long-term business to eventually become a big city in the country's best pro-business market. ”
Ackman, a long-time Warren Buffett student, said he was inspired to become a 24-year-old investor after reading a letter from Berkshire Hathaway shareholders. .
Pershing Square bought 10,000,000 new public offerings of Howard Hughes common stock for $90 per share, according to a company press release. Pershing Square already owns 31% of the company. Ackman served as Howard Hughes chairman from 2010 to April last year.
Ackman said in Howard Hughes' plan that the plan “adopts a similar, long-term, shareholder-oriented principle to Berkshire” and “intentions to hold forever stock”.
The genius of Buffett buying a dying textile company is that it is still generating strong cash flows, which Buffett redirects to the buying company, which he believes has strong long-term growth prospects. Unlike Berkshire Hathaway, who no longer owns any textile business, Ackman said Howard Hughes will continue to develop MPCs in Texas. But he also plans to use the company's real estate portfolio to bring steady cash flows to strong long-term investments.
