JPMorgan for now isn't buying that Bill Ackman can create the next Berkshire Hathaway
JPMorgan isn't convinced that Bill Ackman's vision to transform real estate developer Howard Hughes Holdings into a "modern-day" Berkshire Hathaway will soon prove fruitful. The Wall Street investment bank downgraded its rating on Howard Hughes to neutral from overweight Monday after Ackman's Pershing Square struck a deal in May to boost its holding to nearly 47% through a new investment of $900 million. "Pershing Square and Bill Ackman's intention is to use the cash infusion into the company to make investments outside real estate (perhaps into insurance) and turn HHH into a diversified holding company," JPMorgan analysts led by Anthony Paolone said. "As a result, we don't think the thesis of strong real estate performance narrowing the [net asset value] gap and/or the company taking actions to narrow the NAV gap (i.e., buybacks, go-privates, asset sales, etc.) is as prevalent as it was prior." Ackman intends to turn Howard Hughes from a real estate company with master-planned communities into a company with controlling stakes in other public and private businesses, much like Warren Buffett's Berkshire. Ackman previously said it is "highly likely" that he will build or buy an insurance company for Howard Hughes, which would mirror the history of the Omaha-based conglomerate, which owns auto insurer Geico and other insurance and reinsurance businesses. HHH YTD mountain Howard Hughes shares in 2025. JPMorgan believes the direction of the stock will increasingly depend on the potential new investments Ackman makes for Howard Hughes, which creates an uncertain outlook. "The restructuring of the company and shift in control to Pershing Square and Bill Ackman changes the focus to being a diversified holding company," JPMorgan said. "We think the stock and thesis will depend more on what these new investments are precisely." As part of its call, the bank also lowered its year-end price target on Howard Hughes by more than 7%, to $76 per share from $82 per share. The new target is still 14% higher than Monday's close at $66.75. Howard Hughes, based outside Houston, has fallen more than 13% so far in 2025, on track to decline for the third year in four.
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The Hill
43 minutes ago
- The Hill
In a blow to Milei, a US judge orders Argentina to turn over its majority stake in state oil company
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San Francisco Chronicle
44 minutes ago
- San Francisco Chronicle
In a blow to Milei, a US judge orders Argentina to turn over its majority stake in state oil company
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San Francisco Chronicle
an hour ago
- San Francisco Chronicle
Can't afford an average home in S.F.? Try a mansion in Sacramento instead
A mid-priced home in San Francisco and San Mateo County costs nearly as much as a luxury home in the Sacramento area. It's not just that homes in the San Francisco metro area are far more expensive than they are in the Sacramento region — though they certainly are. The estimated price of a mid-tier home that sold in the San Francisco area from March to May was nearly $1.5 million, according to online real estate brokerage Redfin, almost three times the typical $589,000 price tag in the Sacramento area. But the price gap between a 'normal' home (one in the middle third of values) and a mansion (in the top 5%) is also greater in the Bay Area than it is in the Sacramento region. A top-tier home in the San Francisco metro area, defined in Redfin's data as the city and San Mateo County, cost about $6.2 million, more than four times the price of a mid-tier home. In the Sacramento metro area, a sprawling region that stretches to Lake Tahoe, a luxury home costs less than $1.7 million, less than three times the price of a mid-tier home. The most expensive metro areas don't necessarily have the largest gaps between luxury homes and mid-tier homes. Florida's West Palm Beach and Miami metro areas have relatively moderate prices for mid-tier homes, at just above $500,000. But luxury homes in those metros can cost about eight times as much as a non-luxury home. The Sacramento metro area, on the other hand, has the second-lowest gap, with the Portland, Ore., area having the absolute lowest ratio. Cheryl Dibachi, a Roseville-based luxury home broker associate with Compass who moved from the Bay Area in 2005, said she regularly receives inquiries from Bay Area homebuyers who realize they can get much more space for their money further inland. She herself more than doubled her square footage for roughly the same amount of money once she moved to the Sacramento area, she said. 'If you want a luxury property but can't spend the $20 million-plus, there are great opportunities here, and you still have the proximity to the Bay Area,' Dibachi said. Additionally, the luxury market is relatively new to the Sacramento area, Dibachi said, with higher-end properties mostly being homes rebuilt after 2000, around when the region saw a jump in housing demand. That new demand may have partially stemmed from out-migration of relatively well-off people from the Bay Area, which has a longer history of mansions with eye-popping prices. The difference in the price gap likely reflects the two regions' levels of income inequality. The average income of the top 20% of earners in San Francisco was 28 times what the bottom 20% made, according to U.S. Census Bureau data from 2023. The same ratio was just 14 in Sacramento and Placer counties. But the Sacramento region has its own affordability challenges. Researchers have found that the cost of home insurance is far outpacing homeowner income. And Dibachi also said home prices are also starting to rise as more people flock to the area. 'Over the last three years, I've seen a pretty dramatic jump in what people are willing to pay,' she said. 'And it's really, I think, mainly because they can't get the product anywhere else.'
