Bill Ackman's Next Big Move Revealed... (Hint: It's Not Another Herbalife Short)

Well in light of B. Riley set to go tits up with a bruising investment loss and an SEC probe on slimy dealings, Bill Ackman is looking to play things a little safer on his side of the street with…  Real Estate.

(Source: Bloomberg)

Yep, who cares about investment funds and IPO’s when you can leverage your billions of dollars stashed under a mattress to exploit the #1 industry that’s minted the most millionaires in history, amirite?

(Source: Giphy) 

This is exactly what Bill Ackman is thinking as he’s just sent filings to the SEC in efforts to take Howard Hughes Holdings private. Now for those just catching up here, this comes fresh off the heels of Ackman launching his new investment fund IPO, in hopes of raising a cool $25 billion to kick things off. Spoiler: It didn’t go as planned. 

Unfortunately, for Ackman, the investor enthusiasm in this escapade fizzled faster than the honeymoon phase in most American’s marriages leaving Ackman with a forced retreat. But now, Mr. Bill, being the tough nut to crack that he is, is now looking for the next big thing in Howard Hughes.

(Source: Reformed Broker) 

Which isn’t surprising considering that Howard Hughes Holdings isn’t just a regular real estate behemoth. It’s the Beyoncé of master-planned communities, where dreams meet dirt in developments like The Woodlands in Texas and Summerlin in Vegas. 

Downtown Summerlin (Source: Vegas4Locals)

Yet, despite already being involved with Howard Hughes since its days as part of General Growth Properties in 2008 - with a current hefty stake of 37.5% of the company, Ackman now wants all in on this real estate giant without the pressure of public markets behind him. Especially when you take in the fact that Howard Hughes recent earnings in June were nothing short than stellar.

(Source: Nasdaq) 

For instance, while most of the market was showing cracks of a major sell-off in the making, Howard Hughes was strutting its picks and shovels as they body bagged revenue estimates by +9.83%, with a +42.13% revenue increase year-over-year. Additionally, Howard Hughes also showed tremendous growth (looking like the fake screenshots of your favorite online trading guru) as Net income, Diluted EPS, and Net Profit Margin all catapulted 213.97%, 212.82%, and 180.16% YoY. 

(Source: Yahoo Finance) 

So clearly, Ackman sees potential where most investors have overlooked. And now, by taking Howard Hughes private, he’s not only gaining freedom, but he can maneuver strategic growth opportunities without Wall Street analysts breathing down his neck. Meaning, this move definitely makes sense. 

Now of course, only time will tell if he can successfully pull this off without any speed bumps like his failed IPO and his brutal loss to Carl Icahn on his Herbalife short (He'll never live that one down). But in a world where stocks are as fickle as the next TikTok trend, real estate still remains to be the classic OG of the free markets - timeless and extremely valuable.

(Source: Giphy) 

In the end, I can definitely see why Ackman is doing this. Because, even though the stock price hasn’t necessarily reflected the financial growth of the company as it’s down -13.02% YTD (down -43.12% the past five years), this could be the ultimate dip buy where the intrinsic value is about as hard to find as my dignity during my college days. (Don’t judge) 

(Source: Giphy)

So with all of that said, as this story continues to develop (pun intended), Howard Hughes may have some more room left to run from its current $70.20 per share price level. (If you’ve ever read “You Can Be A Stock Market Genius” by Joel Greenblatt, you know what I’m talking about). 

Simply put, mergers, spin-offs, and going private are major catalysts in the leadup into the actual event, so it may be in your best interest to keep an eye on Howard Hughes Holdings going forward. 

(Source: Giphy) 

But even with that, don’t be ignorant and bet the farm on my think so’s. Like my dad always used to tell me: “If I ordered a truck load of idiots, and I only got you, I’d definitely get my money's worth”. Translation: I have no idea what I’m talking about, so make sure you do your due diligence before YOLOing into any speculative investment. 

At the time of this writing, Howard Hughes Holdings is down-0.042% on the day. 

(Source: Google Finance) 

Stocks.News does not hold any positions in companies mentioned in the article.