This is one of the more rigorous investment write-ups I've come across on Substack. The sum-of-the-parts approach is the right framework for a conglomerate this complex, and Pete's transparency about assumptions at every layer — discount rates, growth rates, combined ratios, capitalization multiples — gives you enough to disagree with specific inputs without dismissing the whole thesis. The Berkshire replication question is the heart of this. Every generation of investors produces someone who wants to build the next Berkshire, and virtually every attempt has failed. Pete identifies the right reasons why — most prior attempts were financing vehicles for hedge fund fee extraction, not genuine long-term compounding structures. The Pershing fee arrangement is better aligned than most, but the reference price issue is a real concession that minority shareholders are subsidizing. Acknowledging that while still building a constructive case is the kind of honest analysis that's rare in public stock write-ups. The MPC business is the part I find most compelling and most underappreciated. A 50-60 year buildout timeline with monopolistic control over land supply in growing metros is a genuine structural moat. The Summerlin 7% residential price growth assumption over 17 years is the input I'd scrutinize hardest — that's a long extrapolation in a single metro, and Las Vegas has historically been more cyclical than most Sun Belt markets. The real test is whether Ackman can resist the temptation to get clever. Buffett's compounding came from decades of disciplined, often boring capital allocation. The Pershing track record is exceptional but built on a concentrated, high-conviction style that's produced spectacular volatility alongside the returns. Berkshire's durability came from boring consistency. Whether Pershing can deliver that over decades is the open question no spreadsheet can answer. For anyone following HHH — what's the one assumption in the thesis that would change your mind if it broke?
I guess the obvious answer is it depends on the asset and the price! Anything that generates cash for a higher-return use without undermining competitive strength would be a positive for me. Did you have something specific in mind?
They listed two Houston multifamily assets, Creekside Park and Creekside Grove. They're not located in the "core" of the Woodlands and their performance has likely disappointed HHH. I think they're going to sell at sub-5% caps on in-place NOI (NOI per Q4 sup).
Yes, listed for sale. I view it as positive generally, the cap rate will be well inside public market pricing or assumptions, although that discount hasn't mattered for years. I'd rather have $65M net go back to Ackman & co than stay in a B+ multi deal. It's just not consistent with past HHH behavior (not selling) so I am trying to understand the goal.
I think they’ve got to be careful with what they sell, and there are some assets they won’t want to sell, but selling noncore multifamily makes sense to me. And as you say, there are likely better uses for the capital.
This is one of the more rigorous investment write-ups I've come across on Substack. The sum-of-the-parts approach is the right framework for a conglomerate this complex, and Pete's transparency about assumptions at every layer — discount rates, growth rates, combined ratios, capitalization multiples — gives you enough to disagree with specific inputs without dismissing the whole thesis. The Berkshire replication question is the heart of this. Every generation of investors produces someone who wants to build the next Berkshire, and virtually every attempt has failed. Pete identifies the right reasons why — most prior attempts were financing vehicles for hedge fund fee extraction, not genuine long-term compounding structures. The Pershing fee arrangement is better aligned than most, but the reference price issue is a real concession that minority shareholders are subsidizing. Acknowledging that while still building a constructive case is the kind of honest analysis that's rare in public stock write-ups. The MPC business is the part I find most compelling and most underappreciated. A 50-60 year buildout timeline with monopolistic control over land supply in growing metros is a genuine structural moat. The Summerlin 7% residential price growth assumption over 17 years is the input I'd scrutinize hardest — that's a long extrapolation in a single metro, and Las Vegas has historically been more cyclical than most Sun Belt markets. The real test is whether Ackman can resist the temptation to get clever. Buffett's compounding came from decades of disciplined, often boring capital allocation. The Pershing track record is exceptional but built on a concentrated, high-conviction style that's produced spectacular volatility alongside the returns. Berkshire's durability came from boring consistency. Whether Pershing can deliver that over decades is the open question no spreadsheet can answer. For anyone following HHH — what's the one assumption in the thesis that would change your mind if it broke?
Thank you for the kind words!
Thanks for a great article
Thank you!
Would you be encouraged or discouraged if they start selling some of lesser or non-core operating assets?
I guess the obvious answer is it depends on the asset and the price! Anything that generates cash for a higher-return use without undermining competitive strength would be a positive for me. Did you have something specific in mind?
They listed two Houston multifamily assets, Creekside Park and Creekside Grove. They're not located in the "core" of the Woodlands and their performance has likely disappointed HHH. I think they're going to sell at sub-5% caps on in-place NOI (NOI per Q4 sup).
How do you mean they listed? As available for sale? I’d have no issue with that. Not every asset will work.
Yes, listed for sale. I view it as positive generally, the cap rate will be well inside public market pricing or assumptions, although that discount hasn't mattered for years. I'd rather have $65M net go back to Ackman & co than stay in a B+ multi deal. It's just not consistent with past HHH behavior (not selling) so I am trying to understand the goal.
I think they’ve got to be careful with what they sell, and there are some assets they won’t want to sell, but selling noncore multifamily makes sense to me. And as you say, there are likely better uses for the capital.