Bill Ackman probably wouldn't mind being mentioned in the same breath as Warren Buffett. In fact, a recent deal between his Pershing Square fund and Howard Hughes Holdings (NYSE:HHH) aims to transform the real estate business into a diversified holding company much like that of Buffett's Berkshire Hathaway. Investors looking to take advantage of Ackman's investment acumen might consider buying a stake in the company.
But it will take a long time for the billionaire's vision for Howard Hughes to play out. Investors who want to follow his best ideas right now can follow along with Pershing Square's quarterly filings with the Securities and Exchange Commission (SEC), which disclose all of the hedge fund's $13.6 billion equity holdings, of which more than half is in the following three stocks.
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1. Uber Technologies (19% of equity portfolio)
Uber Technologies (NYSE:UBER) is a new addition to Pershing Square's portfolio. Ackman and his team invested roughly $2.3 billion in Uber at the start of 2025. Those shares are now worth roughly $2.6 billion, making it the biggest holding in the portfolio.
Ackman believes the fears that the rise of autonomous vehicles will push down the value of Uber are misplaced. Uber benefits from a considerable network effect with more than 170 million users connecting with millions of drivers for rides and deliveries. That network is extremely valuable to autonomous vehicle companies, making Uber a natural partner. Partnering with Uber allows self-driving car companies to grow faster and increase the utilization of their vehicles, helping them maximize their revenue.
To be sure, autonomous vehicle ubiquity is still a long ways away. In the meantime, Uber continues to produce strong financial results, exhibiting significant operating leverage as it scales. Earnings before interest, taxes, depreciation, and amortization (EBITDA) soared 35% last quarter on the back of a 14% increase in gross bookings. The company forecast similar growth for the second quarter as well.
Uber's also showing strong growth in free cash flow, or what's left of cash flow after capital spending. It produced $2.3 billion in free cash flow last quarter, up 66% year over year. At last year's investor day, management said it aims to convert more than 90% of EBITDA into free cash flow over the next three years.
Despite the strong growth outlook, Uber's stock still trades at a good value. Even after some price appreciation since Ackman's purchase, Uber trades for an enterprise value-to-EBITDA ratio of about 25. That's a great price for a company that is increasing EBITDA at about 30% per year.
2. Brookfield (17%)
Brookfield (NYSE:BN) is a diversified alternative asset management company with investments across real estate, renewable energy, and infrastructure. Pershing Square first established a position in the Canadian company in 2024, and it's consistently added since. It added another 6.1 million shares in the first quarter, pushing its total investment value to about $2.4 billion today.
The corporate structure of Brookfield is unique, with several publicly traded spin-offs and subsidiaries. For example, Brookfield Asset Management (NYSE:BAM) is Brookfield's core holding and the main investment arm. It owns 73% of BAM's shares while the rest is publicly traded. Other publicly traded Brookfield assets include Brookfield Infrastructure and Brookfield Renewable, which also trades as a partnership. The structure is designed to give investors flexibility and maximize the value of its assets. On top of its subsidiaries, Brookfield also includes some separate real estate holdings and an annuities business.
The investments are performing well. Distributable earnings increased 27% year over year in the first quarter thanks in part to divesting a money-losing road fuels business. Management said it expects to boost cash flow at a 20%-plus annual rate through 2029 at last year's investor meeting, giving it an additional $47 billion to allocate to new investments and return to shareholders.
Ackman points out that nearly all of Brookfield's market cap is accounted for by its public equity holdings. That means investors can get access to its annuity business and its private investments for an extremely low price. The shares currently trade for just 13.8 times its trailing distributable earnings. Ackman suggests a multiple of 16 should be the floor for Brookfield's value and management thinks it should be worth about 18 times distributable earnings. As such, it looks like a bargain at its current price.
3. Howard Hughes Holdings (14%)
Howard Hughes Holdings is a real estate company specializing in master-planned communities. Ackman invested in the company in 2023, attracted to its high-quality assets amid the nation's housing shortage. As mentioned, Pershing Square recently struck a deal with Howard Hughes to acquire 9 million newly issued shares. That gives it a 47% stake in the business worth about $1.9 billion as of this writing.
Howard Hughes' core holdings offer a lot of promise. Management estimates the value of its assets at $5.9 billion, which means the $4 billion stock trades for a discount. It's generating modest net operating income growth, with expectations for it to come in as much as 4% higher in 2025. Long-term, management sees net operating income climbing another 37% from 2024 levels based on existing projects.
Management has historically used the free cash flow generated by its real estate business to pay down debt, invest in new projects, and repurchase shares. Ackman plans to use the cash to diversify the business. He said one of his first moves will be to add an insurance business either by building it from the ground up or via acquisition. Insurance will provide funds for investment through float -- premiums collected from policy holders before claims are paid out -- which is basically cheap capital for Ackman to invest. It's the same way Buffett transformed Berkshire Hathaway from a textile producer into a diversified holding company.
The new structure of the company comes with some drawbacks. Namely, there's the $3.75 million quarterly fee paid to Pershing Square in addition to a 0.375% incentive fee for increasing the value of the business. However, it could provide investors with a way to invest directly in Ackman's best ideas. Considering the stock trades below management's conservative estimate for its net asset value, it may be worth adding for investors hoping Ackman can emulate Buffett's success.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Levy has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Berkshire Hathaway, Brookfield, Brookfield Corporation, Howard Hughes, Nike, and Uber Technologies. The Motley Fool recommends Brookfield Infrastructure Partners, Brookfield Renewable, and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
