market folly

Bill Ackman's hedge fund Pershing Square Capital Management has recently filed an activist 13D on shares of Howard Hughes Corp (HHC). Per the filing (with activity on November 9th), Ackman has revealed a 13.8% ownership stake in HHC with 5,484,684 shares. This figure includes warrants exercisable for 1,916,667 shares. To see Pershing Square's entire updated portfolio, head to the brand new issue of our Hedge Fund Wisdom newsletter that was just released.

Pershing Square received shares of HHC due to their ownership of shares in General Growth Properties (GGP). Upon GGP's emergence from bankruptcy, GGP spun-off various assets in the form of a new company: Howard Hughes (HHC). GGP owners received 0.098344 shares of HHC per every 1 share of GGP owned on November 1st. Ackman also recently updated his ownership stake in GGP.

While Ackman has disclosed a 13.8% ownership in HHC via common stock, his economic exposure to the company is technically much higher at around 28% (including common stock, warrants, and cash settled total return swaps). These swaps give Pershing exposure to an additional 5,399,839 shares, bringing their aggregate economic exposure to 10,884,523 shares of HHC (or 27.5% of the outstanding shares).

Ackman's activist 13D on HHC also attached numerous other documents, including a standstill agreement which effectively caps Pershing's potential ownership stake at 40%. Ackman will also act as chairman of the board for the company.

Taken from Yahoo Finance, Howard Hughes is "a real estate investment and development company, engages in the development and management of retail, commercial, and industrial buildings in North America. Its facilities feature residential, entertainment, mixed use, recreation, culture, and resort components. The company also develops single-family homes, town homes, and condominiums, as well as involves in office buildings and land developments."

Be sure to check out the rest of Ackman's latest investments (and those of 22 other top investors) in our just released new issue of Hedge Fund Wisdom.