Bloomberg Audio Studios, podcasts, radio news. I am sending by now with Bill Ackman. Of course he's the CEO of Pershing Square, but also the new executive chair of Howard Hughes came in this morning with a nine hundred million dollar deal. Of course, that brings your stake to more than a billion dollars when you include all of your affiliates as well. Why you've 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 steak in the company is much larger. We talk about a billion two. That's a nine hundred million dollar investment that's being made by Ryan israel I CIO, myself and other Persian 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 well on a
billion two. And our plan is to take this great company, which has been a real estate development company over its fourteen year history, and transform it into a diverse fight holding company.
That's the business plan.
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. Buffet's stepping down as the CEO. Have you any 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 Hathway. Warren Buffet's been an incredible sort of hero for me. I've learned an enormous amount watching the creation of Berkshire Hathway over my career, and he's an aspiration. But you know, how are used will be something different. We're starting out differently. You know, Buffett started out with a business with not particularly attractive
long term prospects that 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 to real value to. But it's a very valuable platform. It's a business is 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 nine hundred million and then over time, when and.
If excess cash it 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 and A what would that entail?
Sure?
So, obviously a Berkshire has had the benefitbuff it'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, you know most other
insurance companies are standalone public companies. Here, you have an insurance company that's a major part of a diverse right holding company, and that's given Buffet 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.
You know, that's you know, sort of part of the you know, 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 strategy, the strategy of the Pershing Square funds is to buy minority stakes in large cap and megacap 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 one hundred percent interests in private companies, maybe some small cap public companies much smaller scale and controlling 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 to tell 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 Persing Square is to build is one to deliver great returns for our investors and our shareholders and the shareholder of Howard Hughes, and of course that benefits Pershing Square, the person 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 ninety four and still incredibly active, you know, if I want to compete with that track record over time, it's important that we set up an entity that can survive of the very long term. So I don't know exactly what form
that will take. We did sell them minority interest in Pershing Square to a group of investors last year, and we set up an i boartive directors and we really run Persian Square the management company today almost as if it's a public company from a governance and other perspective.
Now, 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 Perching Square.
Already.
How are the tariffs impacting you today and how do you think that impact will last six months, twelve 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 some commodity prices are 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 know source certain key products in the United States, have them be manufactured here, whether those of 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 eighty years you know, beginning after World War Two, the United States, you know, helped save the world and then help 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 marshall plant etcetera, to recover, and then over time those tariff barriers have remained even as those countries have become very aggressive competitors the United States. Think the Japanese auto industry and how it is really dominated US 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 US goods. The other issue is 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 I would call it shock and awe, which tends to scare people, but ultimately he's.
A deal maker.
He likes to make deals, and I expect, you know, he did the right thing in pausing tariffs reciprocal tariffs for ninety days, and I think that gives time to negotiate with our eighteen largest countries. And I think the next step probably should be, I call it one hundred and eighty 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 are tariff of one hundred and forty five percent
on goods they sourced from China. Can decimate the businesses, 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 f one hundred and eighty days on China sets up a very interesting dynamic where, you know, puts US really in driver's e Give me one second,
I want to it's an important point. So right now, because of the announcement, every business that sources in China's, every US company, et cetera, is relocating their supply chains out of China. That's not going to change even if the tariffs go from one hundred and forty five percent
down to ten or down to twenty percent. 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 at enabling a very successful negotiation.
So you were among the first to advocate for that ninety day pause. Did you talk to anybody in the Trump administration or the President himself?
And are you in talks with him about.
This one hundred and eighty day pause? So you post about that online as well, so you are getting more vocal about this idea kind of happened.
I think it can certainly happened. And you know, I heard Scott Bessett 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 on the administration.
Well, 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 one.
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 terriffs. That will take the pressure immediately off of
kind of the smaller businesses. And you know it's not just affecting small but no, by the way, there are some positive effects from the China terriffs, which you know a number of US 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 small, medium size, and large businesses that manufacture in the US. 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 avoided.
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 think I don't think of recessions 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 sixty or ninety days.
You mentioned that even after that sixty ninety, one hundred and eighty days that tariffs will.
Still be higher.
I don't know what the ultimate outcome is, and it's not just tariffs. You got to look at the overall effect of the various trade barriers coming down right there. There are countries with low terroiffs but still have enormous barriers to US goods in their markets, and so it could absolutely be a lot of reasons for optimism about the economy. So one, you know the tax bill yesterday, the treasure Secretary said it could be signed in July fourth.
That's a very pro growth initiative. 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, uh, you know, for you know, 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 terriff situation. I think the sooner that's resolved, the more that the economy can can move forward it. And there's also reasons for optimism kind of geopolitically, you know. I think it's likely will uh you know, we'll have I think the Ukraine Russia war can get resolved this calendar year,
and hopefully sooner rattan later. I think the Middle East can be 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 would call it for the resignation of Penny Pritzker from Harvard's board. Now have you talked to her, her or any of the other board members, So.
I spoke to her, you know, very early on, in the midst of the events after on campus, after October seventh. They've only spoken to her once. And by the way, I don't know. Well, I'm sure she's a lovely person, but at some point you have to accountability for what's gone on at Harvard, and I've not seen any accountability at the governance level.
You know.
The notion that she's still sharing 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 managed the last you know, eighteen months the way that they managed, there would be a new 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, 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 antisemitism and Prohomas issues on campus. He makes some very good points about bureaucratic waste at the institution.
You know, I.
Believe that if taxpayers are funding a private institution like Harvard, and 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 should. Education is about being.
Exposed to diverse views, and if you know, university, as I've said, becomes a political advocacy organization, you know, query whether it should be getting taxpayer support.
Well, we thank you so much for joining us here, and said that has been Ackman, who of course is the CEO of Persian Square as well as the new executive chair of Howard Hugh's fresh off of a deal just this morning,