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Bill Ackman raises bid for Howard Hughes, says he will turn it into ‘modern-day Berkshire’

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Bill Ackman, CEO of Pershing Square Capital Management, speaks during an interview for an episode of “The David Rubenstein Show: Peer-to-Peer Conversations,” in New York on Nov. 28, 2023.

Jeenah Moon | Bloomberg | Getty Images

Pershing Square’s Bill Ackman hiked his takeover offer for Howard Hughes Holdings, offering current holders of the real estate company $90 a share to create a “modern-day” Berkshire Hathaway.

The billionaire investor said Tuesday that his firm has submitted a proposal to acquire 10 million newly issued Howard Hughes shares at $90 per share, up from $85 per share from January. If the transaction goes through, Pershing Square will own 48% of the real estate developer based in The Woodlands, Texas.

Shares of Howard Hughes fell nearly 5% in extended trading following the news. The stock had closed up 6.8% at $80.60 in anticipation of the announcement.

Ackman will become chairman and CEO of Howard Hughes if the deal comes to fruition. He added that his investment company will not sell any of the shares as it intends to be a long-term investor.

“We will make available the full resources of Pershing Square to HHH to build a diversified holding company, or one could say, a modern-day Berkshire Hathaway,” Ackman said in a post on social media site X. “The new HHH will acquire controlling interests in private and public companies that meet Pershing Square’s criteria for business quality.”

Ackman said he took inspiration from the unusual career path of the legendary “Oracle of Omaha.” The 94-year-old Warren Buffett started out, essentially, as an activist investor and hedge fund manager running a series of private partnerships, until the 1960s when he closed his partnerships and took control of Berkshire Hathaway, a struggling textile business.

Today, Berkshire is worth $1 trillion with businesses in industries including insurance, energy, railroad and retail as well as a massive equity portfolio and more than $300 billion in cash.

Ackman said Howard Hughes will continue to develop and own “master planned communities” such as The Woodlands in Houston and Summerlin in Las Vegas.

“Owning small and growing MPCs that will eventually become large cities in the best pro-business markets in the country is a great long-term business,” he said in the post. “It’s a lot better than a dying textile company.”

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T. Rowe Price likes stock picking now

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One of the largest active ETF managers on leveraging fund tactics in new ways

It appears T. Rowe Price is benefitting from the record growth in actively managed exchange traded funds.

Tim Coyne, the firm’s head of ETFs, reports the firm is seeing significant growth in the area — listing the T. Rowe Price Capital Appreciation Equity ETF (TCAF) and T. Rowe Price U.S. Equity Research ETF (TSPA) as two established strategies that can satisfy investor demand.

“I think having that professionally managed portfolio is really beneficial to clients,” Coyne told CNBC’s “ETF Edge” this week. “We’re seeing just… greater volatility [and] uncertainty across both the equity and fixed income markets.

According to Coyne, the T. Rowe Price Capital Appreciation Equity ETF suits investors who are looking for long-term growth.

“The objective of the fund is to outperform the S&P 500 with lower volatility and greater tax efficiency,” he said. “It’s also a more concentrated portfolio, typically holding around a hundred names.”

As of April 24, the fund’s top holdings include Microsoft, Amazon, and Apple according to the T. Rowe Price website. But it’s not all Big Tech. The ETF also features smaller positions in companies like Becton Dickinson and Roper Technologies.

The T. Rowe Price Capital Appreciation Equity ETF is down about 5% so far this year while the S&P 500 is off about 7% However, the ETF is up close to 8% over the past year — roughly identical to the S&P 500’s performance.

Coyne notes the T. Rowe Price U.S. Equity Research ETF follows a similar strategy, but with a heavier weighting in top tech stocks.

“This is more of a large-cap growth product [T Rowe Price U.S. Equity Research ETF],” he said. “There are components of characteristics of both passive and active here. This fund is actually managed by our North American directors of research. So again, strong fundamental research is going into the stock selection.”

Both the T. Rowe Price U.S. Equity Research ETF and S&P 500 are down around 7% since the beginning of the year. Meanwhile, the fund is up almost 9% over the past year. That’s less than one percent better than the S&P 500’s performance.

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T. Rowe Price U.S. Equity Research ETF vs. S&P 500

‘Some form of bear market’

Strategas Securities’ Todd Sohn thinks investment demand for active managers will continue to be strong.

“This is the type of the environment where it [active management] can actually shine,” the firm’s senior ETF and technical strategist said. “We are in some form of bear market. This is where the active manager really can come into hand and offer their solution they are doing right.”

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