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Bill Ackman, billionaire hedge fund investor, in February said his proposal to boost his stake in Howard Hughes Inc. (NYSE:HHH) would allow him to create a "modern-day" version of Berkshire Hathaway (BRK.A) (BRK.B), the insurance giant and investing behemoth built by legendary investor Warren Buffett.

In an interview on CNBC on Monday, Ackman said Howard Hughes (NYSE:HHH) might either acquire or build an insurance company. He pointed out that "a huge enhancement" to Berkshire Hathaway's returns over time is that Buffett built a profitable insurance company that generates, basically, free money, called "float."

"The benefit of building an insurance company inside one inside a diversified holding company is that "it gives you a lot more flexibility in what you can invest the insurance company's assets in," he said. "If you're a pure-play insurer, you can't take that much risk. You basically buy fixed-income securities."

"So that model has not gone unnoticed by us... It's highly likely, we'll build or buy an insurance company," Ackman said.

https://seekingalpha.com/news/4441057-ackman-aspir...

I’m wrestling with the idea of Bill Ackman’s ambition to build a "modern Berkshire Hathaway". It’s strikes me wrong.

+ Investment Philosophies and Track Records:
Ackman's Activism vs. Buffett's Passive Approach…Warren known for his patient, long-term investing in undervalued companies with strong fundamentals and letting management teams operate independently is quite different from Bill’s aggressive approach.  
+ Concentrated Bets vs. Diversification: Berkshire Hathaway is a highly diversified holding company vs. Ackman's Pershing Square typically runs a much more concentrated portfolio.
+ Performance History: While Ackman has had periods of strong performance, his track record isn't as consistently long and lauded as Buffett's decades of market-beating returns. 
2. Differing Personalities and Public Images: Buffett has cultivated an image of humility, patience, and folksy wisdom. Bill is known for being more outspoken and sometimes confrontational.
+ Built Over Decades: BRK’s success is the result of decades of consistent and disciplined capital allocation under Buffett's leadership. Replicating this organically and quickly is a monumental challenge.  
+ Insurance "Float": A significant Berkshire advantage - its insurance operations. Buffett has skillfully used this low-cost capital to invest and acquire businesses. As Bill builds his model, he’s mentioned exploring the insurance sector (e.g buy or build).
+ Scale and Legacy: Berkshire Hathaway market capitalization in the trillions vs HHH a much smaller market cap, highlighting the long road ahead to achieve comparable scale.  

And the greatest craw stickler for me…
+ Timing and Motivation: Ackman's announcement comes at a time when Warren Buffett is nearing the end of his tenure at Berkshire. This timing strikes me as opportunistic rather than a genuine long-term vision.

While ambition isn't inherently negative, the desire to be the next Berkshire Hathaway might feel more about Ackman’s personal legacy rather than purely about creating exceptional shareholder value in a similar way.

Off chest…feeling much better now.

Respectfully,
PaulnKC

I bought some HHH back when I first heard that Ackman was planning on using it as the basis for a compounding company.

He's done well at compounding and gets more things right than wrong. This is a jockey play, but I'm going to let it run.

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