Bill Ackman：Howard Hughes引入第三方资本并剥离长期国债

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So you just had your Howard Hughes investment day and again the biggest acquisition you did for this was very recently closing this insure Vantage and with that you get some more firepower behind you to invest. What is the plan with that money? What are you looking at?

Sure. So if you if you follow Mr. profit over 60 years. Incredible 61 years maybe incredible career and you look at what how did he create so much value at Birkshire Hathway over time. He did I would say two principal things maybe maybe three. Um first he as he wound down the the textile operation he took the capital and bought an insurance company and then he managed the assets of that insurance company differently from a typical insurer.

He took the float and invested in short-term treasury so the policy holders knew that they there was money set aside to pay claims and then he took the surplus with the insurer and he invested in common stocks and he did a good job managing that portfolio and insurance is a very cash flow generative business because you write premiums you collect money up front and you you pay it out in the future and as a result uh Bergkshire was able to grow at a very rapid rate compounding uh the insurance company's assets earning a high return on capital without having to issue stock and so Berkshire had a million shares outstanding for most of its life uh until uh I guess the gen reacquisition.

So the combination of growing a very valuable business inside a company and not issuing stock as you grow led to enormous perure value being created. Basically we're taking a page from Mr. Buffett. Vantage is a specialty insurer and reinsure. Uh we closed in June. Uh in July we announced that Mark Rison, the former CEO of Arch Capital Group, one of the best performing insurance companies over the last 25 years. Uh he was the CEO for the last 8 years.

He was at Arch really from inception. Uh he's became executive chair of Vantage. Uh Mark recruited David Gansburg, former president, his protege uh at Arch Capital Group. Uh Lucy Vetto, former vice chair, general counsel of AIG who brought in enormous horsepower to what was already a very good insurance company platform. Already had a very good team. And we're taking the uh we immediately sold the fixed income assets which has become increasingly important right because of the move in rates.

Yes,

we invested the money in short-term treasuries uh about 60 5% or so when 35% of the assets we invested in a common stock portfolio that we manage. So our goal is to build a high roe

uh specialty insurance company led by a superb team with us managing the assets and grow Howard Hughes and increase uh the intrinsic value of the company. Just on that note on selling longerdated treasuries which obviously to your point was a very precient move considering what rates are doing. Is this an environment where generally you'd be voiding duration be it Howard Hughes or any of the other investments that you look at?

I know equity majority investor but is that bond market untouchable right now?

I'm not really a fixed income investor. I I never found the riskreward of owning a a longer term fixed income instrument interesting. Just not my I sort of like risk-free or high return. I I don't like stuff.

Well, on the on the equity portion then of Vantage, how far can you push this? How how much can you invest into equities?

So, we're going to run a relatively low leverage insurer. Most insurance companies, you know, write amount of premium equal to uh you know, the equity the capital of the insurer. We'll write less than that. Um and we'll also most insurers invest you know something like 2 and a half times uh their equity in assets and we'll invest less than that. So, we'll have much less leverage on both sides. will take zero risk for the bulk of the uh insurance company assets as I mentioned in short-term treasuries that frees us up the flexibility under the capital rules to have something in order of 40 to 50%

of the of the uh approaching 40% of the asset 40 45% of the assets in common stocks

and and and the Vantage acquisition any other transformal transformational acquisitions you're looking at or Vantage is done and you can set that aside for now

I would say it's certainly not done it's at the very beginning and Mark's going to do his thing

but we announced something else of significance today. I I tweeted about it and and and we talked about it today um which is Howard Hughes uh has built an extraordinary team as an amazing collection of assets in markets where people want to live and the businesses selling lots to home builders in these small what we call MPCs these small cities that we that we manage. We own all the commercial real estate uh the land uh etc.

It's a business we financed entirely with our own equity for the last 15 years. uh we're going to a model. We're going to bring in third party investors. Uh you know, think Brookfield, you know, think Blackstone, right? Uh the typical real estate investor today puts up very little of their own money. They charge fees and promotes. Uh we're going to have a lot of skin in the game. Today, we have 100% of of the equity.

We're going to begin a process uh immediately uh to bring in partners to reduce our equity commitment to our real estate by as much as 80%. Mhm.

Uh and then turn Howard Hughes into more of a asset man real estate asset management business with a lot of skin in the game but one that can earn a much higher return. When you take out 80% of the equity, bring in third party capital, Eurotes, we're that will enable us to take, we think, two three billion dollars of of equity over the next, you know, sometime by the end of next year, hopefully,

right?

Capital that we can now redeploy into uh Vantage and you know, when you get a very talented team, you want to put more capital behind them and that's what we're doing with Mark. What the real estate subsidiary benefits now can earn much higher returns because it's leveraging third party capital. that's going to enable it to accelerate some of the development assets that you know in the context of the cost of public company capital were difficult to achieve or difficult to justify now become much more attractive.

So, while you've been working on this, you also launched your IPO both at Persian Square and Persian Square USA. When it comes to the latter one, the the closed end fund, you raised $5 billion and it's since fallen 25%. It also trades at a discount of 25 cents to every dollar. Something that you

say both of those are the same thing actually. The the

You're clarifying my clarification, so I'm I'm pleased for that. But you've called this ridiculous this this discount that it's trading at. Bill, what do you do to turn that around? uh among other things we go on Bloomberg TV and we talk about it.

All right, this is the moment. So talk about it. What's gone wrong?

Okay, so we we did an interesting IPO in that we did two list we did a listing and an IPO. We took public a closed end fund but a very different closed end fund. So typical closed end fund frankly doesn't have a very good track record. Uh and uh the it's not really a financial it's a financial product that's sold generally to a financial adviser. A client is usually not particularly involved. In this case, for the majority of the investors, the substantial majority of the investors, they made an investment in this entity to invest with Persian Square.

Historically, to invest with Persian Square as a US citizen, you had to invest with us privately in a fund where we charged a 1 and a half% management fee and a 20% incentive fee, and you had to lock up your money for, you know, over a longer period of time. This is a liquid public vehicle that doesn't charge an incentive fee.

It's the lowest cost hedge fund in the world. It's got a 19 19% compounded, you know, n