Ackman’s Berkshire Play: Can Howard Hughes Replicate Buffett’s Success?

In 2025, Bill Ackman made a bold move to recreate Warren Buffett’s Berkshire Hathaway model through his stake in Howard Hughes Holdings Inc. (HHH), a real-estate developer turned conglomerate-in-the-making. The $900 million investment—a 48% premium over HHH’s stock price—marks a high-stakes bet on replicating Berkshire’s enduring success. But can Ackman, the activist investor behind Pershing Square Capital Management, pull it off?

The Blueprint: Structural Replication of Berkshire Hathaway

Ackman’s strategy hinges on transforming HHH into a diversified holding company, mirroring Berkshire’s structure. The plan splits HHH into two divisions:
1. A holding company focused on acquiring controlling stakes in high-quality public and private firms.
2. A real-estate division, maintaining its core business in master-planned communities.

The goal is to leverage permanent capital and avoid the liquidity demands of a hedge fund. To ensure governance balance, Pershing Square’s voting power is capped at 40%, despite holding a 46.9% economic stake.

Financial Engineering and Fees

The deal terms include a $3.75 million quarterly base fee for Pershing Square, plus an incremental management fee tied to HHH’s market cap growth. This aligns Ackman’s incentives with shareholders. However, HHH’s stock price of $71 in 2025—down 7.5% year-to-date—contrasts sharply with Berkshire’s $1.2 trillion valuation.

Leadership and Strategic Focus

Ackman became Executive Chairman, with Ryan Israel (Pershing’s CIO) managing acquisitions. David O’Reilly retained CEO duties, ensuring continuity in real estate. The insurance sector is a key target, with plans to build an insurer from scratch to replicate Berkshire’s low-cost float—a move that avoids legacy liabilities.

Historical Context and Challenges

Ackman’s vision faces hurdles:
- Stock Performance: HHH’s shares have fallen 75% from their 2014 peak of $150, due to its “pure-play real-estate” label, which carries a high cost of capital.
- Pershing Square’s Struggles: Its closed-end fund trades at a 30% discount to NAV, underscoring investor skepticism.
- Berkshire’s Scale: HHH’s $3.4 billion market cap pales against Berkshire’s $1.2 trillion, raising questions about its ability to compete in large acquisitions.

Portfolio Shifts and Sector Bets

In 2025, Ackman’s broader portfolio reflected the Berkshire-inspired strategy:
- Increased Stakes:
- Brookfield Corporation (15.9% of Pershing’s portfolio): A bet on infrastructure and renewables.
- Alphabet (17.4%): Targeting AI and cloud computing growth.
- Reduced Holdings:
- Hilton Worldwide and Chipotle: Cut due to labor costs and slowing growth.

Market Reaction and Risks

The deal sparked an 8% premarket jump in HHH’s stock, but long-term success hinges on:
1. Execution: Identifying and integrating high-quality businesses without overpaying.
2. Insurance Venture: Proving the viability of a new insurer in a competitive market.
3. Real Estate Risks: Balancing growth in master-planned communities against macroeconomic headwinds.

The Bottom Line: A Risky Gamble with Potential

Ackman’s plan is audacious but grounded in Berkshire’s proven formula. The 48% premium paid for HHH signals confidence in its undervaluation, while the governance terms aim to mitigate conflicts. However, replicating Buffett’s success requires navigating execution risks, sector volatility, and the shadow of a $1.2 trillion giant.

Key Data Points:
- HHH’s YTD 2025 net return: 0.5% (vs. Berkshire’s 8% five-year return).
- Pershing Square’s five-year underperformance: -29% vs. Berkshire’s +8%.
- HHH’s target ownership stake in Berkshire: 15% (currently 13.5%).

In conclusion, Ackman’s Howard Hughes play is a high-risk, high-reward experiment. While the structural blueprint mirrors Berkshire’s strengths—diversification, permanent capital, and long-term focus—the execution will determine whether HHH becomes the “modern-day Berkshire” or another chapter in Ackman’s mixed legacy. The market has shown cautious optimism, but only time will tell if this bet pays off.