Pershing Square Capital Management, a major owner of Howard Hughes Corp (HHC), recently added 6,154 shares. The buy increased the fund’s holdings by under 1 percent, and came to a total cost of just under $460,000.
That was the fund’s fourth buy in the span of a month, following large purchases including a 1,560,205 share but and a 657,160 share buy. Overall, the fund has increased its stake by over 15 percent in the past month.
Overall, Pershing Square owns about 32 percent of Howard Hughes, and company insiders own just under 1 percent of shares.
The real estate owner and developer dropped 25 percent in the last year, slightly more than the overall market. While conditions have tightened over the past year, Howard Hughes saw a strong operational year with a 192 percent rise in revenues, and a 2,567 percent growth in earnings.
Those trends will likely slow over the next year. However, shares still trade near their book value, and continued growth makes the stock look inexpensive at 16 times earnings.
Action to take: Investors may like shares here. With a large fund ownership, there may be some buyout play that could lead to a rise in the share price in the next year. At present, the stock doesn’t pay a dividend.
For traders, the July $75 calls are an at-the-money trade. Last going for about $10.50, traders can likely see high double-digit returns at some point in the first half of the year before expiration.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.