Letter to Shareholders in the 2025 Semiannual Financial Statement

Bill Ackman argued that markets are showing signs of speculative excess even as the economic backdrop strengthens, warning that "investment selection will be paramount" heading into the second half of 2025. He cited moderating inflation, potential Fed easing, AI productivity gains, and progress toward resolving conflicts in Europe and the Middle East as tailwinds, but cautioned that "markets are ebullient" and "signs of speculative activity are everywhere." The letter's centerpiece is Ackman's plan to transform Howard Hughes Holdings into a "modern-day Berkshire Hathaway." Pershing Square Holdco paid $900 million for a 15% stake at $100 per share, a 48% premium to the pre-announcement price, with Ackman returning as Executive Chairman. The first strategic initiative is for HHH to acquire a property-casualty insurer whose assets Pershing Square will manage at no cost, replicating Berkshire's float-driven compounding model. Ackman argued HHH's cost-of-capital problem cannot be solved as a pure-play master planned community company and that diversification into higher-returning, lower-leverage businesses will re-rate the stock. Tariff volatility drove unusual trading activity: Ackman trimmed UMG, Hilton, Chipotle, and exited Canadian Pacific at prices above subsequent levels, then added to Alphabet and Hilton after the April selloff and initiated a new position in Amazon at 25 times forward earnings. PSH's NAV rose 15.5% in H1 2025 versus 6.2% for the S&P 500, with Uber, Fannie Mae, UMG, and Freddie Mac the top contributors. The thread connecting the moves is Ackman's preference for capital-light franchises with durable pricing power, repositioned opportunistically around macro-driven dislocations.