Bill Ackman certainly likes the Howard Hughes Corporation. He helped create its present form back in 2010 and has served as its chairman ever since. It’s done very well for him, having at times soared nearly fourfold from its debut and serving as one of the drivers of the Ackmanaissance.
Or, at least, it had so served: While other parts of the Pershing Square portfolio have admirably weathered the retail apocalypse, HHC—which operates all manner of malls, along with equally hard-hit offices and hotels—was not so lucky. Its stock lost two-thirds of its value in the early days of the pandemic.
Still, Ackman’s love for company was not dented by this unfortunate turn of events. If anything, he loved it too much. At least, that’s according to the lawsuit filed by another HHC investor, a sheet metal workers’ pension fund in Michigan, which isn’t amused that when HHC decided to sell an additional 12 million shares in late March, 10 million went straight to Pershing Square, by which means it doubled its stake in HHC to nearly 30%, while none went straight to any other shareholder.
The transaction also diluted the interests of the firm's other shareholders who could only participate in the smaller public offering… The pension fund also said in the suit that HHC and Mr. Ackman "provided conflicting information" regarding who agreed to the deal, saying in some places it was approved by HCC's board while disclosing elsewhere that it was OK'd by "independent directors" of the board.
"Based upon the limited and conflicting public disclosures, the approval process for the transaction appears to have violated the company's policies on related-party transactions," the suit said.
No wonder Billy was so eager to offer Elon Musk a shiny new headquarters in Vegas or Houston.