The Making of a New Berkshire: Bill Ackman’s Bold Vision for Howard Hughes and Beyond

Bill Ackman, the billionaire investor behind Pershing Square Capital Management, is on a mission to create the next Berkshire Hathaway. His blueprint? Transform Howard Hughes Corporation (HHH), a real estate firm he’s heavily invested in, into a diversified conglomerate, while leveraging undervalued assets like Hertz Global (HTZ) to fuel growth. Here’s how he’s mapping this ambitious strategy—and whether it could succeed.

Howard Hughes: The Berkshire Playbook

Ackman’s $900 million investment in Howard Hughes in early 2025—securing a 46.9% stake—was no ordinary real estate bet. His goal is to pivot HHH from a land developer into a “modern-day Berkshire Hathaway,” acquiring controlling stakes in high-quality businesses while maintaining its core real estate operations. This strategy mirrors Warren Buffett’s model of combining a stable earnings base with opportunistic investments.

A key element of the plan involves building or acquiring an insurance subsidiary, a cornerstone of Berkshire’s success. By underwriting risks and generating float (premium income), HHH could unlock capital for acquisitions. Ackman’s team has already capped voting rights at 40% to ensure governance balance, a move designed to avoid perceptions of over-control.

The stock surged 5% upon the announcement, reflecting investor optimism. But with HHH trading at a 40% discount to its net asset value, there’s significant upside if Ackman’s vision takes hold.

Hertz: Betting on Tariffs and Turnarounds

Ackman’s 19.8% stake in Hertz Global, acquired through direct purchases and swaps, is another critical piece of his puzzle. The investment hinges on auto tariffs boosting the value of Hertz’s $12 billion fleet. A 10% rise in used car prices—already observed in early 2025—could generate a $1.2 billion gain, nearly half Hertz’s market cap at the time.

Hertz’s operational shifts—reducing fleet sizes, improving revenue per unit (RPU), and cutting costs—are also central to the thesis. By late 2024, RPU declines had narrowed from 7% to 1%, signaling stabilization. The stock’s 56% rally after Ackman’s stake increase highlighted investor confidence.

Despite this surge, Hertz’s shares remain down 90% from their 2019 peak, offering Ackman a chance to capitalize on undervaluation.

The Portfolio: Beyond Real Estate and Cars

While Howard Hughes and Hertz are the crown jewels, Ackman’s broader portfolio reflects his value-oriented approach. As of late 2024, Chipotle Mexican Grill (CMG) remained a top holding (12% of Pershing Square’s fund), despite a 17% drop in 2025. The company’s strong free cash flow ($3.6B from 2021–2024) and debt-free balance sheet justify the stake, even as same-store sales dipped 0.4% in Q1 2025.

Ackman’s focus on cash flow resilience and operational discipline—traits shared with Buffett—extends to his other picks: Uber (17%), Alphabet (14%), and Brookfield (13%). These positions align with his belief in companies with “moats” and scalable models, even in volatile markets.

The Risks and Challenges

Ackman’s ambitions aren’t without hurdles. Hertz faces near-term headwinds: its 2024 revenue fell 3.4%, and a $2.9B GAAP net loss stemmed from over-investment in EVs. While these issues are “in the rearview mirror,” weak tourism due to trade wars and rising interest rates could pressure earnings.

Howard Hughes also faces skepticism. Real estate valuations depend on office demand and interest rates—both uncertain. Meanwhile, replicating Berkshire’s success is no small feat; few have matched Buffett’s track record of compounding returns.

Conclusion: A High-Stakes Gambit, Backed by History

Ackman’s strategy is audacious but rooted in his proven ability to turn around undervalued assets. His 2008 investment in General Growth Properties (GGP), which spun off HHC, yielded nearly 100x returns—a testament to his knack for spotting mispriced opportunities.

The Howard Hughes transformation could be his magnum opus. By blending real estate with Berkshire-style conglomerate economics, he aims to create a self-sustaining capital engine. Hertz’s fleet value upside and operational improvements provide near-term catalysts, while Chipotle and other holdings offer steady cash flows.

If history repeats, Ackman’s hands-on approach—capped voting rights, performance-based fees, and operational leadership—could pay off. Yet, success hinges on navigating macro risks and executing the conglomerate model without overextending.

For now, investors are betting on Ackman’s track record. With Howard Hughes’s stock up 5% on the plan and Hertz’s shares surging 56% on his stake, the market is giving him the benefit of the doubt. Time will tell if this becomes the next Berkshire—or a cautionary tale.

Data as of April 2025. Past performance does not guarantee future results.