Pershing Square Capital Management, a major owner of Howard Hughes Corp (HHC) has been adding shares in recent days. The fund bought 62,474 more shares, shelling out over $4.6 million, a buy that increased the fund’s holdings by just under 1 percent.
This marks the first insider buy of the year. Last year, Pershing Square bought shares on 4 separate occasions, at prices close to where the stock trades today. There was only one insider sale from a company division president.
Overall, company insiders own 0.9 percent of shares. Pershing Square owns about 32 percent of Howard Hughes.
The real estate development company has lost about a quarter of its value in the past year. Earnings have slid further, with a 50 percent decline, and revenues are down 40 percent. However, the company owns a diversified mix of real estate assets, and should be able to grow over time.
Action to take: Shares are a reasonable buy at current prices or below. Investors may want to buy shares now, and look to buy more on a drop to around $70.50 or lower, the approximate book value of Howard Hughes shares at the moment. The stock does not pay a dividend.
For traders, shares have pulled back in recent weeks, but may start to trend higher. The October $90 calls, last going for about $4.00, could potentially see high double-digit gains in the months ahead.
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.