Bill Ackman Moves to Emulate Warren Buffett with Howard Hughes Holdings

Warren Buffett gained control of Berkshire Hathaway in 1965, transforming it from a struggling textile mill into a thriving insurance business. This pivot laid the groundwork for massive growth, resulting in a market value increase of over 5,500,000% during his tenure and an average annual return of 20% over 60 years. Buffett’s acquisition and investment strategies made Berkshire a trillion-dollar company, one of only 11 globally.

As Buffett prepares to step down as CEO at Berkshire, billionaire Bill Ackman aims to replicate this success with Howard Hughes Holdings. He recently increased his hedge fund’s stake to 46.9% by purchasing an additional 900 million shares, intending to acquire controlling interests in various companies.

Ackman’s Stock Moves and Performance

Ackman ranks among the top 20 hedge fund managers by net gains, outperforming the S&P 500 by 24 percentage points over the past five years. In the first quarter, he disclosed investments in Hertz Global, Uber Technologies, and Brookfield Corporation. More recently, he bought Amazon (NASDAQ: AMZN), which has surged 855% over the past decade.

Pershing Square’s chief investment officer, Ryan Israel, noted confidence in Amazon’s ability to navigate potential downturns in its cloud computing segment, despite any tariff impacts on retail earnings.

Three Growth Areas for Amazon

Amazon’s market value stands over $2 trillion, with potential for further growth in three key areas:

• Amazon continues to dominate the U.S. online marketplace and expects to gain market share, with domestic retail e-commerce forecast to grow 8% annually through 2028, per eMarketer.
• Ranking as the third-largest adtech firm globally, Amazon is capturing market share from leaders like Google and Meta Platforms, with U.S. retail ad spending projected to increase 17% annually through 2028.
• Amazon Web Services (AWS), the largest public cloud provider, anticipates 20% annual sales growth through 2030, according to Grand View Research.

Retail advertising and cloud services yield higher margins than online retail, enhancing Amazon’s profitability. Additionally, the company is developing around 1,000 generative AI applications to boost productivity across various functions.

Wall Street’s Bullish Outlook on Amazon Shares

Having achieved an 855% increase in value over the last decade, Amazon remains a Wall Street favorite. Among the 71 analysts following the company, 96% rate the stock a buy, with a median target price of $235 per share, suggesting a 14% upside from the current price of $205.

Analysts expect Amazon’s earnings to rise 10% annually through 2026. Although its current price-to-earnings (P/E) ratio of 33 may seem high, past performance indicates analysts may be underestimating Amazon’s potential, as it has consistently exceeded consensus earnings estimates.

Investment Considerations for Amazon

If you’re contemplating a $1,000 investment in Amazon, consider that the Motley Fool Stock Advisor team recently identified another set of stocks that they believe offer greater return potential. Amazon did not make this top 10 list.

Historically, stocks on the Stock Advisor list, such as Netflix and Nvidia, have yielded substantial returns, suggesting the potential for high performance in selected stocks.

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The views expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.