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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. I am sending by

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Speaker 1: now with Bill Ackman. Of course he's the CEO of

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Speaker 1: Pershing Square, but also the new executive chair of Howard

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Speaker 1: Hughes came in this morning with a nine hundred million

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Speaker 1: dollar deal. Of course, that brings your stake to more

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Speaker 1: than a billion dollars when you include all of your

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Speaker 1: affiliates as well. Why you've said you're going to turn

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Speaker 1: this into a diversified holding company. You said, this is

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Speaker 1: the intent to create a modern day Berkshire Hathaway.

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Speaker 2: How do you plan to make that happen?

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Speaker 3: Sure, Actually, our steak in the company is much larger.

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Speaker 3: We talk about a billion two. That's a nine hundred

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Speaker 3: million dollar investment that's being made by Ryan israel I CIO,

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Speaker 3: myself and other Persian Square team members. And on top

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Speaker 3: of that, our funds own a substantial stake in the company.

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Speaker 3: So we're on a look through basis well on a

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Speaker 3: billion two. And our plan is to take this great company,

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Speaker 3: which has been a real estate development company over its

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Speaker 3: fourteen year history, and transform it into a diverse fight

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Speaker 3: holding company.

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Speaker 2: That's the business plan.

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Speaker 3: We're going to do that by buying great, really high quality,

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Speaker 3: durable growth companies.

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Speaker 1: Now it's interesting to the extent that you want this

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Speaker 1: to be kind of the next Berkshire Hathaway. You know,

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Speaker 1: we had some amazing news over the weekend here, historic

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Speaker 1: really for Berkshire. Buffet's stepping down as the CEO. Have

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Speaker 1: you any had any plans to reach out to Buffett

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Speaker 1: himself to figure out how to do this?

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Speaker 3: So, first of all, I don't want to say we

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Speaker 3: want to be the next Berkshire Hathway. Warren Buffet's been

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Speaker 3: an incredible sort of hero for me. I've learned an

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Speaker 3: enormous amount watching the creation of Berkshire Hathway over my career,

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Speaker 3: and he's an aspiration. But you know, how are used

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Speaker 3: will be something different. We're starting out differently. You know,

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Speaker 3: Buffett started out with a business with not particularly attractive

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Speaker 3: long term prospects that he acknowledged. In our case, we're

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Speaker 3: starting out with a business that has very attractive long

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Speaker 3: term prospects. It's a wonderful business, but it's not a

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Speaker 3: business that I would say Wall Street is assigned to

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Speaker 3: real value to. But it's a very valuable platform. It's

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Speaker 3: a business is going to generate an enormous amount of

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Speaker 3: cash over many decades. And what we're going to do

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Speaker 3: is we're going to take the nine hundred million and

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Speaker 3: then over time, when and.

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Speaker 2: If excess cash it gets.

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Speaker 3: Is created at the real estate subsidiary, then we'll have

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Speaker 3: even more flexibility to use that cash over time. And

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Speaker 3: we've got a good track record investing in the highest

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Speaker 3: quality growth companies in the world. We're going to do

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Speaker 3: that on a much smaller scale as a controlling shareholder

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Speaker 3: at Howard Hughes.

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Speaker 1: Now you've mentioned also that insurance might be part of

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Speaker 1: the future in a bigger way for this company. How

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Speaker 1: do you plan to expand on that insurance arm and

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Speaker 1: to the extent that you would be willing to do

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Speaker 1: M and A what would that entail?

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Speaker 2: Sure?

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Speaker 3: So, obviously a Berkshire has had the benefitbuff it's an

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Speaker 3: amazing investor. But the enhancement to his selection of great

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Speaker 3: companies and securities is that he's financed that not just

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Speaker 3: with equity, but very low cost leverage in the form

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Speaker 3: of insurance flow. That's something obviously that you learn when

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Speaker 3: you follow Berkshire Hathaway, and interestingly, you know most other

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Speaker 3: insurance companies are standalone public companies. Here, you have an

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Speaker 3: insurance company that's a major part of a diverse right

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Speaker 3: holding company, and that's given Buffet and Berkshire significant advantages

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Speaker 3: in terms of increasing the flexibility of how that float

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Speaker 3: can be invested. So that's a model that we're going

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Speaker 3: to pursue. We're going to likely pursue it by recruiting

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Speaker 3: a great CEO and a team and building a company

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Speaker 3: maybe from scratch, maybe from a very small scale.

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Speaker 2: You know, that's you know, sort of part of the

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Speaker 2: you know, the business plan.

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Speaker 1: Now, one big question I'm sure a lot of investors

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Speaker 1: have for you is how are you going to ensure

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Speaker 1: that the Howard Hughes business doesn't compete with Pershing Square,

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Speaker 1: both in terms of investments as well as your time.

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Speaker 3: Sure, So, Pershing Square strategy, the strategy of the Pershing

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Speaker 3: Square funds is to buy minority stakes in large cap

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Speaker 3: and megacap companies, in great businesses in some cases that

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Speaker 3: have lost their way, and we can be helpful in

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Speaker 3: making them more successful, or in great businesses that for

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Speaker 3: whatever reason the market is not assigning a proper value

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Speaker 3: or people responding to news unrelated to the business, and those.

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Speaker 2: Stocks get cheap.

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Speaker 3: But it's a minority investment strategy in very large companies.

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Speaker 2: Howard Hughes.

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Speaker 3: We're going to use Howard Hughes to acquire controlling interests

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Speaker 3: one hundred percent interests in private companies, maybe some small

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Speaker 3: cap public companies much smaller scale and controlling interest Now,

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Speaker 3: what about.

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Speaker 1: The rest of Pershing Square as well? A lot of

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Speaker 1: people still have a lot of questions. Do you plan

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Speaker 1: to still raise money for a closed end fund?

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Speaker 3: Sure SEC doesn't like to tell us to talk about

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Speaker 3: potential future offerings, so I have to defer on that one.

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Speaker 1: So what about for Pershing Square overall? What's the long

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Speaker 1: term plan? There has been an IPO floated around, but

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Speaker 1: do you still see yourself getting there? And over what

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Speaker 1: kind of timeline?

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Speaker 3: So the long term plan for Persing Square is to

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Speaker 3: build is one to deliver great returns for our investors

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Speaker 3: and our shareholders and the shareholder of Howard Hughes, and

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Speaker 3: of course that benefits Pershing Square, the person Square funds

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Speaker 3: because we have a major investment already in Howard Hughes

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Speaker 3: that we look forward to making more valuable. So that's

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Speaker 3: kind of our laser focus. I do want to make

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Speaker 3: Pershing Square an entity that survives. We manage permanent capital,

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Speaker 3: so it's important that the manager that oversees that permanent

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Speaker 3: capital becomes a perpetuity. And while Buffett is ninety four

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Speaker 3: and still incredibly active, you know, if I want to

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Speaker 3: compete with that track record over time, it's important that

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Speaker 3: we set up an entity that can survive of the

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Speaker 3: very long term. So I don't know exactly what form

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Speaker 3: that will take. We did sell them minority interest in

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Speaker 3: Pershing Square to a group of investors last year, and

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Speaker 3: we set up an i boartive directors and we really

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Speaker 3: run Persian Square the management company today almost as if

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Speaker 3: it's a public company from a governance and other perspective.

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Speaker 1: Now, I want to talk about your portfolio as well

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Speaker 1: here because with this new company you had mentioned small

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Speaker 1: and medium sized businesses. Of course, you're exposed to a

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Speaker 1: large swath of the American economy through Perching Square.

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Speaker 2: Already.

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Speaker 1: How are the tariffs impacting you today and how do

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Speaker 1: you think that impact will last six months, twelve months

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Speaker 1: from now?

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Speaker 3: Sure, So, first we own We try to own businesses

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Speaker 3: where no matter what's going on in the world, what

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Speaker 3: we call extrinsic factors, we can't control whether those some

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Speaker 3: commodity prices are tariffs excuse me, or a pandemic interest

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Speaker 3: rate volatility, don't have a material effect on the business.

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Speaker 3: So we look for what we call durable growth companies.

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Speaker 3: And these are the kind of businesses we're going to

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Speaker 3: try to find. For Howard Hughes, they're very much insulated

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Speaker 3: from things macro. Obviously they do better. Every business does

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Speaker 3: better in a positive growth environment, does worse in a

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Speaker 3: weakening growth environment. But our companies today, other than Nike,

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Speaker 3: I would say, have really not been directly affected by tariffs.

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Speaker 3: Although market prices move up and down based on uncertainty.

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Speaker 2: Does that not bother you?

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Speaker 3: Though? No, it doesn't bother me. Look, the President has

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Speaker 3: an objective here, right. It's critically important for the United

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Speaker 3: States strategically and defensively for us to know source certain

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Speaker 3: key products in the United States, have them be manufactured here,

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Speaker 3: whether those of pharmaceutical ingredients or stuff we need to

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Speaker 3: defend the country, to build weapons, AI anything AI related semiconductors,

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Speaker 3: and so creating the incentive for those important high value

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Speaker 3: manufacturing and other activities happening here.

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Speaker 2: I think it's critically important.

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Speaker 3: You know, for eighty years you know, beginning after World

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Speaker 3: War Two, the United States, you know, helped save the

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Speaker 3: world and then help save the world economically and allowed

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Speaker 3: for trade barriers.

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Speaker 2: To be built up over time.

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Speaker 3: That's allowed Asia, excuse me, countries in Asia Europe to

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Speaker 3: marshall plant etcetera, to recover, and then over time those

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Speaker 3: tariff barriers have remained even as those countries have become

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Speaker 3: very aggressive competitors the United States. Think the Japanese auto

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Speaker 3: industry and how it is really dominated US auto industry

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Speaker 3: over time, and it's time for those trade barriers to

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Speaker 3: come down. And the President is using tariffs in a

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Speaker 3: tactical way to address those trade barriers, which are not

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Speaker 3: just tariffs, but there are other things that make it

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Speaker 3: difficult for US goods. The other issue is trying to

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Speaker 3: address is balance of trade. Right, we still have balance

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Speaker 3: of trade issue. Buffett actually talks about this long term

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Speaker 3: as a problem and he wants to incentivize companies to

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Speaker 3: do business in the United States.

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Speaker 2: Now.

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Speaker 3: The way he goes about things, as we've seen from

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Speaker 3: the President, is a bit of a I would call

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Speaker 3: it shock and awe, which tends to scare people, but

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Speaker 3: ultimately he's.

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Speaker 2: A deal maker.

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Speaker 3: He likes to make deals, and I expect, you know,

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Speaker 3: he did the right thing in pausing tariffs reciprocal tariffs

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Speaker 3: for ninety days, and I think that gives time to

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Speaker 3: negotiate with our eighteen largest countries. And I think the

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Speaker 3: next step probably should be, I call it one hundred

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Speaker 3: and eighty day pause, take down the China tariffs. That

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Speaker 3: will give US businesses that are actually under pressure. There

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Speaker 3: are a lot of businesses unlike the ones we own,

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Speaker 3: that are tariff of one hundred and forty five percent

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Speaker 3: on goods they sourced from China. Can decimate the businesses,

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Speaker 3: particularly small businesses that don't have the wherewithal to manage

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Speaker 3: through this period of time. So I think we want

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Speaker 3: to be economically our strongest when we're negotiating, and the president,

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Speaker 3: you know, pausing tariffs f one hundred and eighty days

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Speaker 3: on China sets up a very interesting dynamic where, you know,

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Speaker 3: puts US really in driver's e Give me one second,

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Speaker 3: I want to it's an important point. So right now,

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Speaker 3: because of the announcement, every business that sources in China's,

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Speaker 3: every US company, et cetera, is relocating their supply chains

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Speaker 3: out of China. That's not going to change even if

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Speaker 3: the tariffs go from one hundred and forty five percent

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Speaker 3: down to ten or down to twenty percent. So once

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Speaker 3: we pause, China is under enormous pressure to make China

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Speaker 3: a good place to do business, to eliminate these kind

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Speaker 3: of trade barriers, and I think at enabling a very

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Speaker 3: successful negotiation.

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Speaker 1: So you were among the first to advocate for that

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Speaker 1: ninety day pause. Did you talk to anybody in the

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Speaker 1: Trump administration or the President himself?

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Speaker 2: And are you in talks with him about.

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Speaker 1: This one hundred and eighty day pause? So you post

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Speaker 1: about that online as well, so you are getting more

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Speaker 1: vocal about this idea kind of happened.

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Speaker 3: I think it can certainly happened. And you know, I

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Speaker 3: heard Scott Bessett was here yesterday. He seemed very constructive

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Speaker 3: on where negotiations are headed.

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Speaker 2: So we shall see.

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Speaker 1: But more specifically, is he receptive to your idea?

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Speaker 3: You know, I don't think it's a good idea for

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Speaker 3: me to discuss relationships or conversations I have with people

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Speaker 3: on the administration.

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Speaker 1: Well, fair enough, do you think that there could be

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Speaker 1: exemptions made? You mentioned small businesses. This is a part

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Speaker 1: of the economy that is getting hard hit. You've said

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Speaker 1: it yourself. How is this a main street strategy If

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Speaker 1: small businesses are getting hit harder than the larger one.

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Speaker 3: Sometimes you have to have some short term pain to

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Speaker 3: get a much better long term outlook. But I think

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Speaker 3: the President has made his points clear, and I do

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Speaker 3: think it's important to kind of, you know, pause the

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Speaker 3: China terriffs. That will take the pressure immediately off of

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Speaker 3: kind of the smaller businesses. And you know it's not

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Speaker 3: just affecting small but no, by the way, there are

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Speaker 3: some positive effects from the China terriffs, which you know

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Speaker 3: a number of US manufacturers, many are doing very well

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Speaker 3: because of course people are looking to source product in

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Speaker 3: this country. To the extent something's made in China before

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Speaker 3: and there's someone you can source from in America, you're

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Speaker 3: banging down the door to do.

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Speaker 2: Business with them here.

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Speaker 3: So there is a big boost to a meaningful number

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Speaker 3: of small, medium size, and large businesses that manufacture in

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Speaker 3: the US. But there is a negative effect on companies

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Speaker 3: that don't have that flexibility or the nimbleness to move

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Speaker 3: their supply chains quickly.

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Speaker 2: That's what I'd like to see avoided.

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Speaker 1: Do you think that this can be done while avoiding

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Speaker 1: a recession. Do you think that a recession is a

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Speaker 1: foregone conclusion.

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Speaker 2: At this point, I don't.

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Speaker 3: I think I don't think of recessions foregone conclusion, and

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Speaker 3: I think there are real reasons for optimism. I just

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Speaker 3: don't want this turbulent period to carry on too long.

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Speaker 3: I'd like to see deals get announced and progress made,

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Speaker 3: and then I think people can start looking beyond the

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Speaker 3: immediate sixty or ninety days.

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Speaker 1: You mentioned that even after that sixty ninety, one hundred

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Speaker 1: and eighty days that tariffs will.

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Speaker 2: Still be higher.

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Speaker 3: I don't know what the ultimate outcome is, and it's

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Speaker 3: not just tariffs. You got to look at the overall

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Speaker 3: effect of the various trade barriers coming down right there.

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Speaker 3: There are countries with low terroiffs but still have enormous

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Speaker 3: barriers to US goods in their markets, and so it

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Speaker 3: could absolutely be a lot of reasons for optimism about

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Speaker 3: the economy. So one, you know the tax bill yesterday,

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Speaker 3: the treasure Secretary said it could be signed in July fourth.

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Speaker 3: That's a very pro growth initiative. Really, the deregulation process

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Speaker 3: could be very pro growth for the country. Inflation has

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Speaker 3: really come down meaningfully energy prices, gas prices, egg prices. Right,

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Speaker 3: that's a very positive thing, uh, you know, for you know,

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Speaker 3: for our economy.

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Speaker 2: And for the consumer.

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Speaker 3: I think the only thing that we suffer from right

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Speaker 3: now of substance economically is the inherent uncertainty about the

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Speaker 3: terriff situation. I think the sooner that's resolved, the more

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Speaker 3: that the economy can can move forward it. And there's

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Speaker 3: also reasons for optimism kind of geopolitically, you know. I

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Speaker 3: think it's likely will uh you know, we'll have I

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Speaker 3: think the Ukraine Russia war can get resolved this calendar year,

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Speaker 3: and hopefully sooner rattan later. I think the Middle East

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Speaker 3: can be the temperature can come way down once we

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Speaker 3: resolve by negotiation or otherwise, the Iranian situation. So I'm

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Speaker 3: an optimist, and I've always been an optimist about our country.

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Speaker 1: So before I let you go, also, I want to

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Speaker 1: have you weigh in on what's happening between Harvard and

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Speaker 1: the Trump administration as well, because this morning you would

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Speaker 1: call it for the resignation of Penny Pritzker from Harvard's board.

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Speaker 1: Now have you talked to her, her or any of

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Speaker 1: the other board members, So.

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Speaker 3: I spoke to her, you know, very early on, in

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Speaker 3: the midst of the events after on campus, after October seventh.

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Speaker 3: They've only spoken to her once. And by the way,

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Speaker 3: I don't know. Well, I'm sure she's a lovely person,

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Speaker 3: but at some point you have to accountability for what's

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Speaker 3: gone on at Harvard, and I've not seen any accountability

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Speaker 3: at the governance level.

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Speaker 2: You know.

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Speaker 3: The notion that she's still sharing the Harvard board and

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Speaker 3: leading the charge here, I think is a big negative.

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Speaker 3: And I think they've mismanaged the relationship with the administration

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Speaker 3: in a way that's enormously economically costly to Harvard and

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Speaker 3: funding at Harvard. And you need a new face at

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Speaker 3: the top of the just even to make a deal right.

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Speaker 3: And again, I go to the corporate Harvard's the oldest

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Speaker 3: corporation in America.

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Speaker 2: Go to any other corporation.

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Speaker 3: If they managed the last you know, eighteen months the

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Speaker 3: way that they managed, there would be a new there

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Speaker 3: would be a new chair, and there would be a

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Speaker 3: new CEO in place. The new CEO is there, but

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Speaker 3: he's more interim. But they've done nothing in terms of

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Speaker 3: accountability at the board level.

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Speaker 1: Has the ship sailed for Harvard in terms of a

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Speaker 1: potential negotiation with the administration.

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Speaker 3: No, and I would love to be helpful there. You know,

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Speaker 3: I care enormously about the institution. I want Harvard to succeed.

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Speaker 3: I think the president has a number of very key

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Speaker 3: issues that are critical. It's not just the issue of

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Speaker 3: antisemitism and Prohomas issues on campus. He makes some very

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Speaker 3: good points about bureaucratic waste at the institution.

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Speaker 2: You know, I.

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Speaker 3: Believe that if taxpayers are funding a private institution like Harvard,

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Speaker 3: and particularly one that has a massive endowment, the university

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Speaker 3: is a fiduciary for those funds. And if they're wasting

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Speaker 3: money on overhead and bureaucracy that really is interfering or

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Speaker 3: certainly not enhancing education, they should do something about it.

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Speaker 2: Harvard should. Education is about being.

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Speaker 3: Exposed to diverse views, and if you know, university, as

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Speaker 3: I've said, becomes a political advocacy organization, you know, query

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Speaker 3: whether it should be getting taxpayer support.

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Speaker 1: Well, we thank you so much for joining us here,

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Speaker 1: and said that has been Ackman, who of course is

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Speaker 1: the CEO of Persian Square as well as the new

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Speaker 1: executive chair of Howard Hugh's fresh off of a deal

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Speaker 1: just this morning,