Bill Ackman and Warren Buffett are two of the most well-known investors of the past 75 plus years. While Buffett is no longer the CEO of Berkshire Hathaway (NYSE:BRK)(NYSE:BRK), he built the conglomerate from owning a textile business into an insurance and investment powerhouse. Ackman is trying to accomplish the same.
Ackman Wants the Next Berkshire Hathaway
Speaking at a recent All-In Podcast live event, Ackman highlighted the investment methods used by Buffett to build value for Berkshire Hathaway over time.
Ackman said Buffett was really the first to focus on the asset side more than the liability side of the insurance sector. The investor added that Buffett was able to build a compounding, tax-efficient machine by writing the risks on insurance, taking premiums, and then investing that money up front.
"Buffett started with a crappy textile company," Ackman said
For Ackman, he's attempting to start with Howard Hughes Holdings (NYSE:HHH), a publicly traded commercial and residential real estate company.
"The market doesn't like this thing."
Ackman said that Wall Street hasn't cared about Howard Hughes stock for a long time and now investors can buy the company at a discount to liquidation value.
"We're going to build this into a compounding machine over the next 50 years. It's something I've always wanted to do."
Ackman highlighted the current assets of Howard Hughes and said the insurance side of the business is minimal, but growing.
"I think we can build a really profitable insurance company."
Ackman said his goal is to build the company into a $1 trillion valued company over time.
Investing Alongside Ackman
Ackman warned investors that this is not a get-rich-quick move.
He also said that successful investors would likely avoid trying to accomplish what Buffett did, without a sharp understanding of the insurance business, something he said he's confident in.
Asked about how investors can invest in the future success of Ackman and the building of the next Berkshire Hathaway, the investor said there are three ways:
- Pershing Square (NYSE:PS): Management company that receives fees and royalties on the investments and entities
- Pershing Square USA (NYSE:PSUS): Portfolio of best ideas, trading at an 18% discount to cash
- Howard Hughes: Trying to build into the next Berkshire Hathaway
Ackman has years of success building Pershing Square through passive and activist stakes that saw him push for changes at companies to unlock shareholder value.
Pershing Square has been betting on Magnificent Seven stocks recently, with two of the newest positions owned by the hedge fund being Meta Platforms Inc. (NASDAQ:META) and Microsoft Corp. (NASDAQ:MSFT).
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