Ackman's Activist Playbook: Navigating Turnarounds and Value in a Volatile Market

TrendPulse FinanceSunday, Jun 8, 2025 3:49 pm ET
53min read

In an era of market volatility, few investors have the audacity—and track record—to place massive bets on corporate turnarounds and structural advantages as Bill Ackman. Over the past year, the Pershing Square CEO has doubled down on high-risk, high-reward strategies, from transforming Howard Hughes Holdings (HHH) into a Berkshire Hathaway-style holding company to betting on tariff tailwinds at Hertz Global (HTZ). These moves offer a masterclass in activist investing, revealing actionable themes for investors seeking value in a shifting landscape.

The Hertz Gamble: Turnaround Investing Meets Tariff Tailwinds

Ackman's 19.8% stake in Hertz, quietly built since late 2024, is a textbook example of his “cigar butt” philosophy—finding undervalued companies with catalysts for recovery. The thesis hinges on two pillars: tariff-driven fleet value appreciation and operational efficiency. By locking in fleet purchases before U.S. auto import tariffs took effect, Hertz stands to gain $1.2 billion if used-car prices rise 10%. Meanwhile, cost-cutting aims to slash depreciation to $300 per unit and boost revenue per unit to $1,500 by 2029.


The stock's rebound from $8.50 to its current price (as of June 2025) reflects early optimism, but skeptics note Hertz's $2.9 billion 2024 net loss and a valuation trading at 23x earnings—a multiple that strains credibility for a company still in the red. The risk? Execution. A $245 million write-down on discounted Tesla EV sales in late 2024 underscores the operational minefield Ackman faces.

Investment Takeaway: Turnaround plays require patience and an appetite for volatility. Investors should prioritize companies with catalysts (like tariff tailwinds) that can meaningfully shift fundamentals, not just hope for a valuation multiple expansion.

Howard Hughes: The Activist's Holding Company Play

Ackman's $900 million investment in Howard Hughes Holdings (HHH)—securing a 47% stake—marks a bold pivot toward building a diversified holding company. By transforming HHH into a vehicle for acquiring controlling stakes in durable-growth businesses, Ackman aims to replicate Berkshire Hathaway's success. The structure includes a 46.9% ownership cap and independent board oversight, balancing control with governance.

The move leverages Pershing Square's capital and expertise to amplify HHH's core real estate business (via its subsidiary, The Howard Hughes Corporation) while exploring new sectors. A quarterly management fee tied to HHH's market cap growth incentivizes strategic value creation. Yet risks linger: HHH's reliance on real estate, a cyclical sector, could amplify volatility during economic downturns.

Investment Takeaway: Activist investors can unlock value by repositioning firms into broader holding structures—provided they have the operational discipline to execute. Look for companies with undervalued core assets and flexible capital to pursue accretive acquisitions.

Key Themes for Activist-Inspired Investing

  1. Turnaround Catalysts Over Turnaround Hope: Focus on companies with tangible, near-term catalysts (e.g., regulatory changes, cost cuts, asset sales) rather than relying on vague “turnaround stories.”
  2. Activist Governance as a Multiplier: Ackman's insistence on independent board members and capped voting power in HHH demonstrates how governance reforms can mitigate risk while aligning interests.
  3. Long-Term Vision in a Short-Term World: Ackman's 2029 timeline for Hertz highlights the necessity of a patient approach. Investors must resist the urge to chase short-term momentum and instead focus on structural advantages.
  4. Risk Management Through Diversification: HHH's pivot to a holding company mirrors the “diversification as defense” strategy of Berkshire Hathaway—a model that could gain traction in volatile markets.

Risks and Reality Checks

Ackman's bets are not without peril. The Hertz investment faces headwinds like labor disputes and unionization efforts, while HHH's success hinges on its ability to identify and integrate high-quality assets. Moreover, the ghost of Carl Icahn's disastrous Hertz stake (which ended in bankruptcy) looms large, reminding investors that even seasoned activists can misjudge leverage and execution.


The data here is critical: HHH's valuation must align with its growth trajectory. If its P/E multiple outpaces earnings materialization, the stock could face a reckoning.

Final Take: Where to Look Next

Ackman's playbook suggests investors should:
- Dig into SEC filings for activist stakes that reflect incremental, well-timed builds (like Hertz).
- Monitor companies with “hidden” assets (e.g., real estate holdings, underutilized brands) ripe for restructuring.
- Prioritize governance reforms—independent boards and management incentives are non-negotiable for sustainable value.

In a market where short-termism dominates, Ackman's long game offers a counterintuitive path. But investors would be wise to remember: even the best activists can't defy fundamentals forever. The question isn't just whether the turnaround works—it's whether the price paid leaves room for error.

Andrew Ross Sorkin is a columnist for The New York Times and the author of "Too Big to Fail."