Pershing Square Capital Founder & CEO Bill Ackman Talks Howard Hughes
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Bloomberg Audio Studios. Podcasts, radio, news. I am standing by now with Bill Ackman. Of course, he's the CEO of Perching Square, but also the new executive chair of Howard Hughes. Came in this morning with a $900 million deal. Of course, that brings your stake to more than a billion dollars when you include all of your affiliates as well.

Why? You said you're going to turn this into a diversified holding company. You said this is the intent to create a modern-day Berkshire Hathaway. How do you plan to make that happen? Sure. Actually, our stake in the company is much larger. We talk about a billion two. That's a $900 million investment that's being made by Ryan Israel, my CIO, myself, and other Pershing Square team members. And on top of that, our funds own a substantial stake in the company. So we're on a look-through basis. We'll own a billion two.

and our plan is to take this great company, which has been a real estate development company over its 14-year history, and transform it into a diversified holding company. That's the business plan, and we're going to do that by buying great, really high-quality, durable growth companies. Now, it's interesting. To the extent that you want this to be kind of the next Berkshire Hathaway, you know, we had some amazing news over the weekend here, historic, really, for Berkshire, for Buffett stepping down as the CEO recently.

Have you had any plans to reach out to Buffett himself to figure out how to do this? So, first of all, I don't want to say we want to be the next Berkshire Hathaway. Warren Buffett's been an incredible sort of hero for me. I've learned an enormous amount watching the creation of Berkshire Hathaway over my career and history.

And he's an aspiration. But, you know, Howard Hughes will be something different. We're starting out differently. You know, Buffett started out with a business with not particularly attractive long-term prospects, as he acknowledged. In our case, we're starting out with a business that has very attractive long-term prospects. It's a wonderful business, but it's not a business that I would say Wall Street is assigned a real value to. But it

It's a very valuable platform. It's a business that's going to generate an enormous amount of cash over many decades. And what we're going to do is we're going to take the $900 million and then over time, when and if excess cash gets...

is created at the real estate subsidiary, then we'll have even more flexibility to use that cash over time. And we've got a good track record investing in the highest quality growth companies in the world. We're going to do that on a much smaller scale as a controlling shareholder at Howard Hughes. Now, you've mentioned also that insurance might be part of the future in a bigger way for this company. How do you plan to expand on that insurance arm? And to the extent that you would be willing to do M&A, what would that entail?

Sure. So, obviously, Berkshire's had the benefit. Buffett's an amazing investor, but the enhancement to his selection of great companies and securities is that he's financed that not just with equity, but very low-cost leverage in the form of insurance flow. That's something, obviously, that you learn when you follow Berkshire Hathaway. And

Interestingly, most other insurance companies are standalone public companies. Here you have an insurance company that's a major part of a diversified holding company, and that's given Buffett and Berkshire significant advantages in terms of increasing the flexibility of how that float can be invested. So that's a model that we're going to pursue. We're going to likely pursue it by recruiting a great CEO and a team and building a company, maybe from scratch, maybe from a very small scale.

That's sort of part of the business plan. Now, one big question I'm sure a lot of investors have for you is how are you going to ensure that the Howard Hughes business doesn't compete with Pershing Square, both in terms of investments as well as your time? Sure. So Pershing Square's strategy, the strategy of the Pershing Square funds is to buy minority stakes in large cap and mega cap companies, in great businesses, in some cases that have lost their way.

and we can be helpful in making them more successful, or in great businesses that, for whatever reason, the market is not assigning a proper value or people responding to news unrelated to the business and those stocks get cheap. But it's a minority investment strategy in very large companies. Howard Hughes, we're going to use Howard Hughes to acquire controlling interests, 100% interest in private companies, maybe some small-cap public companies, much smaller scale and controlling companies.

interest. Now what about the rest of Pershing Square as well? A lot of people still have a lot of questions. Do you plan to still raise money for a closed-end fund?

Sure. SEC doesn't like us to talk about potential future offerings, so I have to defer on that one. So what about for Pershing Square overall? What's the long-term plan? There has been an IPO floated around, but do you still see yourself getting there and over what kind of timeline? So the long-term plan for Pershing Square is to build, is one, to deliver great returns for our investors and our shareholders and the shareholders of Howard Hughes.

And, of course, that benefits Pershing Square, the Pershing Square funds, because we have a major investment already in Howard Hughes that we look forward to making more valuable. So that's kind of our laser focus. I do want to make Pershing Square an entity that survives. We manage permanent capital. So it's important that the manager that oversees that permanent capital becomes a perpetuity.

And while Buffett is 94 and still incredibly active, if I want to compete with that track record over time, it's important that we set up an entity that can survive for the very long term. So I don't know exactly what form that will take. We did sell a minority interest in Pershing Square to a group of investors.

last year and we set up an independent board of directors and we really run Pershing Square, the management company today, almost as if it's a public company from a governance and other perspective. Now, I want to

So I want to talk about your portfolio as well here, because with this new company, you had mentioned small and medium sized businesses. Of course, you're exposed to a large swath of the American economy through Pershing Square already. How are the tariffs impacting you today? And how do you think that impact will last six months, 12 months from now? Sure. So first, we own, we try to own businesses where no matter what's going on in the world,

what we call extrinsic factors we can't control, whether those are commodity prices or tariffs, excuse me, or a pandemic.

interest rate volatility don't have a material effect on the business. So we look for what we call durable growth companies. And these are the kind of businesses we're going to try to find for Howard Hughes. They're very much insulated from things macro. Obviously, they do better. Every business does better in a positive growth environment, does worse in a weakening growth environment. But our companies today, other than Nike, I would say, have really not been directly affected by tariffs, although market prices move up and down based on uncertainty.

Does that not bother you, though? No, it doesn't bother me. Look, the president has an objective here, right? It's critically important for the United States strategically and defensively for us to source certain key products in the United States, have them be manufactured here, whether those are pharmaceutical ingredients.

or stuff we need to defend the country, to build weapons, AI, anything AI related, semiconductors. And so creating the incentive for those important high value manufacturing and other activities happening here, I think it's critically important.

You know, for 80 years, you know, beginning after World War II, the United States, you know, helped save the world and then helped save the world economically and allowed for trade barriers to be built up over time. That's allowed Asia, excuse me, countries in Asia, Europe to, you know, Marshall Plan, et cetera, to recover.

And then over time, those tariff barriers have remained, even as those countries have become very aggressive competitors to the United States. Think the Japanese auto industry and how it has really dominated U.S. auto industry over time.

And it's time for those trade barriers to come down. And the president is using tariffs in a tactical way to address those trade barriers, which are not just tariffs, but there are other things that make it difficult for U.S. goods. The other issue he's trying to address is balance of trade. Right? We still have balance of trade issue. Buffett actually talks about this long term as a problem. And he wants to incentivize companies to do business in the United States.

Now, the way he goes about things, as we've seen from the president, is a bit of a, we call it shock and awe, which tends to scare people. But ultimately, he's a dealmaker. He likes to make deals. And I expect, you know, he did the right thing in pausing tariffs, reciprocal tariffs for 90 days. And I think that gives time to negotiate with our 18 largest countries. And I think the next step probably should be, I call it a 180-day pause,

take down the China tariffs, that will give US businesses that are actually under pressure. There are a lot of businesses, unlike the ones we own, that a tariff of 145% on goods they source from China can decimate the business, particularly small businesses that don't have the wherewithal to manage through this period of time. So I think we want to be economically our strongest when we're negotiating.

And the president, you know, pausing tariffs for 180 days on China sets up a very interesting dynamic where, you know, puts us really in driver's seat. Give me one second. I want to, it's an important point. Of course. So right now, because of the announcement, every business that sources in China, every U.S. company, et cetera, is relocating their supply chains out of China. That's not going to change, even if the tariffs go from 145% down to 10% or down to 20%.

So once we pause, China is under enormous pressure to make China a good place to do business, to eliminate these kind of trade barriers, and I think enabling a very successful negotiation. So you were among the first to advocate for that 90-day pause. Did you talk to anybody in the Trump administration or the president himself? And are you in talks with him about this 180-day pause? I saw you post about that online as well. So you are getting more vocal about this idea. Can it happen?

I think it can certainly happen. And I heard Scott Besant was here yesterday. He seemed very constructive on where negotiations are headed. So we shall see. But more specifically, is he receptive to your idea? You know, I don't think it's a good idea for me to discuss relationships or conversations I have with people in the administration. Fair enough. Do you think that

there could be exemptions made. You mentioned small businesses. This is a part of the economy that is getting hard hit. You've said it yourself. How is this a main street strategy if small businesses are getting hit harder than the larger ones? Sometimes you have to have some short-term pain to get a much better long-term outlook. But I think the president has made his points clear. And I do think it's important to kind of

you know, pause the China tariffs, that will take the pressure immediately off of kind of the smaller businesses. And, you know, it's not just affecting small business. Now, by the way, there are some positive effects from the China tariffs, which, you know, a number of, you know, U.S. manufacturers, many are doing very well because, of course, people are looking to source product in this country. To the extent something's made in China before and there's someone you can source from in America, you're banging down the door to do business with them here. So there is a big boost to a meaningful number of

of small, medium-sized and large businesses that manufacture in the U.S. But there is a negative effect on companies that don't have that flexibility or the nimbleness to move their supply chains quickly. That's what I'd like to see reported.

Do you think that this can be done while avoiding a recession? Do you think that a recession is a foregone conclusion at this point? I don't. I don't think a recession is a foregone conclusion, and I think there are real reasons for optimism. I just don't want this turbulent period to carry on too long. I'd like to see deals get announced and progress made, and then I think people can start looking beyond the immediate 60 or 90 days.

You mentioned that even after that 60, 90, 180 days, that tariffs will still be higher.

I don't know what the ultimate outcome is. And it's not just tariffs. You've got to look at the overall effect of the various trade barriers coming down. There are countries with low tariffs but still have enormous barriers to U.S. goods in their market. And so it could absolutely be a lot of reasons for optimism about the economy. So, one, you know, the tax bill. Yesterday, the Treasury Secretary said it could be signed on July 4th. That's a very pro-growth policy.

Really, the deregulation process could be very pro-growth for the country. Inflation has really come down meaningfully. Energy prices, gas prices, egg prices, right? That's a very positive thing.

for our economy and for the consumer. I think the only thing that we suffer from right now of substance economically is the inherent uncertainty about the tariff situation. I think the sooner that's resolved, the more the economy can move forward. And there's also reasons for optimism kind of geopolitically. I think it's likely we'll

I think the Ukraine-Russia war can get resolved this calendar year and hopefully sooner rather than later. I think the Middle East, the temperature can come way down once we resolve by negotiation or otherwise the Iranian situation. So I'm an optimist and I've always been an optimist about our country.

So before I let you go also, I want to have you weigh in on what's happening between Harvard and the Trump administration as well, because this morning you had called for the resignation of Penny Pritzker from Harvard's board. Now, have you talked to her personally or any of the other board members? So I spoke to her very early on in the midst of the events on campus after October 7th. I've only spoken to her once. And by the way, I don't know her well. I'm sure she's a lovely person.

But at some point you have to have accountability for what's gone on at Harvard. And I've not seen any accountability at the governance level. The notion that she's still chairing the Harvard board and leading the charge here, I think is a big negative. And I think they've mismanaged the relationship with the administration in a way that's enormously economically costly to Harvard and funding at Harvard. And you need a new face at the top of the, just even to make a deal.

Right. And again, I go to the corporate. Harvard's the oldest corporation in America. Go to any other corporation. If they manage the last 18 months the way that they manage, there would be a new chair and there would be a new CEO in place. The new CEO is there, but he's more interim. But they've done nothing in terms of accountability at the board level.

Has the ship sailed for Harvard in terms of a potential negotiation with the administration? No. No, and I would love to be helpful there. You know, I care enormously about the institution. I want Harvard to succeed. I think the president has a number of very key issues that are critical. It's not just the issue of anti-Semitism and pro-Hamas issues on campus.

He makes some very good points about bureaucratic waste at the institution. I believe that if taxpayers are funding a private institution like Harvard, particularly one that has a massive endowment, the university is a fiduciary for those funds. And if they're wasting money on overhead and bureaucracy that really is interfering or certainly not enhancing education, they should do something about it.

Harvard education is about being exposed to diverse views. And if a university, as I've said, becomes a political advocacy organization, query whether it should be getting taxpayer support.

Bill, we thank you so much for joining us here on set. That is Bill Ackman, who of course is the CEO of Pershing Square, as well as the new executive chair of Howard Hughes, fresh off a deal just this morning. Hiscox Small Business Insurance knows there is no business like your business. Across America, over 600,000 small businesses, from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance constantly.

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