Wall Street’s magic man is set to perform his next trick. And it’s not the one everyone is talking about.
Bill Ackman is one of the biggest names on Wall Street. His Pershing Square Capital Management hedge fund has around $14 billion in assets under management and a rich track record.
He’s counted enormous wins such as a $60 million investment in General Growth Properties that turned into $3.5 billion.
But he’s making huge news yet again because of what he did last year.
He was able to time both the March crash and subsequent recovery perfectly. Now with 2020 in the books, his fund announced a 70% return for the year, better than almost any other major fund and all of the indexes.
He also dipped his hands in the SPAC game, by launching one of the largest SPAC IPOs of all time in his Pershing Square Tontine Holdings LTD (NYSE: PSTH).
Speculation is swirling around a potential deal for that latest venture.
But the reason I bring up this highly-visible activist is because of another move he’s made just last week.
All in on Recovery
With his immediate proceeds following his March bets last year, Ackman poured a fortune into companies and real estate hardest hit by the pandemic.
One such bet was a $500 million stake in The Howard Hughes Corp. (NYSE: HHC).
Howard Hughes owns properties called master-planned communities (MPCs). These are huge cities within cities.
They are great big complexes where the company leases out land for residential developers to build homes and Howard Hughes Corp. comes in and builds out the commercial properties that fuel them.
These are ambitious developments that can grow into behemoth cities of their own over decades.
Unfortunately, they often also require a healthy economy, large amounts of travel and hefty leisure spending to become profitable. And 2020 wasn’t the year for any of that.
The company was crushed at the outset of the pandemic, with shares losing more than two-thirds of their value:
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That’s when Ackman stepped in with his huge bet.
This investment too helped out his fund’s historical 2020 performance, as the oversold real estate play rebounded. Though, it still trades well below its pre-pandemic high.
But that’s not what got my interest. It’s what Ackman has quietly done just this past week.
Doubling Down on 2021
Ackman hasn’t made a move on Hughes, nor his other big rebound ideas like Chipotle Mexican Grill Inc. (NYSE: CMG) since last March.
That changed on Wednesday.
Pershing Square Capital, while all headlines were focused on its 2020 performance and speculation around its SPAC, quietly added another 2 million shares of HHC to its portfolio. That’s another $200 million if you’re keeping track.
And it did this after Ackman and company saw shares rise 58% from their initial stake.
This is a clear sign that he believes the recovery to those hardest hit is here.
None of this is to say that Ackman is always right. He has just as long of a history of bad bets like his infamous Herbalife short as anyone.
But if you’re looking for how one of the most successful and influential Wall Street giants is prepping for 2021, this is where you really need to focus.
It’s not what the headlines are talking about. No doubt, Ackman will make a fortune from any deal his SPAC agrees to.
But if his timing on recovery is as astute as it was last March, companies like Howard Hughes should be on your radar.
To your prosperity and health,
Joshua M. Belanger