Who is the true successor to Warren Buffett’s legacy? Hedge fund guy Bill Ackman?

Warren Buffett is arguably one of, if not the greatest investors in history, who “mistakenly” built up Berkshire Hathaway Inc. from a struggling textile startup to a $1 trillion conglomerate over six decades. The exemplary investor is now 94 years old; the question now is who will continue carrying the Berkshire Hathaway name on their sleeve like Buffet did?

In his latest annual shareholder letter, released on February 22, the American philanthropist reaffirmed that Greg Abel, Berkshire’s vice chairman of non-insurance operations, will take over as CEO.

“At 94, it won’t be long before Greg replaces me as CEO and will be writing the annual letters,” Buffett wrote. He assured shareholders that Abel, who was formally named as his successor in 2021, fully comprehends Berkshire’s principles and will maintain the company’s disciplined investment philosophy.

Wall Street knows Abel will run Berkshire’s day-to-day management, but investors are pondering whether he is the true heir to Buffett’s investing legacy, which operates outside the firm. 

Could Bill Ackman build a modern Berkshire Hathaway?

One name the streets of New York are well acquainted with is hedge fund billionaire Bill Ackman, who has spent his career picking “tips” straight out of Buffett’s playbook to build his investment empire.

Ackman, 58, founded Pershing Square Capital Management, a hedge fund that oversees roughly $16 billion in assets. He is a known admirer of Buffett, first learning about him as a college student in Havard before attending Berkshire Hathaway’s annual meetings and even asking Buffett questions from the floor.

Now, Ackman is pursuing his version of a diversified holding company. According to a February 18 Wall Street Journal exclusive, his firm revised an offer to increase its stake in Howard Hughes Holdings Inc., a real estate developer, to 48%.

The 58-year-old businessman now plans to buy 10 million shares worth $900 million to transform Howard Hughes into a vehicle that could acquire controlling stakes in private and public businesses, what he coined as a “modern-day Berkshire Hathaway.”

Pershing Square has submitted a proposal to Howard Hughes Holdings (NYSE: HHH) https://t.co/2CiHxYV59J to acquire 10 million newly issued shares of the company at $90 per share. When combined with the 18.9 million shares that are currently held by the Pershing Square Funds, we…

— Bill Ackman (@BillAckman) February 18, 2025

Pershing Square’s concentrated portfolio currently includes major holdings in companies like food and hospitality companies Chipotle, Hilton, and Google parent Alphabet. Ackman’s personal career also harbors “ambitious” investments, including his famous bet against bond insurer MBIA and his role in rescuing mall operator General Growth Properties.

How Ackman’s strategy compares to Warren Buffett’s

Since Bill Ackman launched Pershing Square in 2004, his funds have generated an average annual return of 19.8% after management fees, almost identical to Buffett’s 19.9% annualized return over six decades. However, once performance fees are factored in, Ackman’s return drops to 16.4%.

Much like the retiring Buffett, Ackman holds a substantial personal stake in his firm that represents roughly 21% of Pershing Square’s funds, compared to Buffett’s 14% ownership of Berkshire. 

The businessman also boasts of building a network of connections in the business world. “I pretty much know every CEO in America or am one step removed,” he reckoned in the Howard Hughes deal presentation.

Berkshire’s structure is a model that Wall Street would term as “simple;” Buffett wound down his investment partnerships early on and used Berkshire as his primary vehicle. Yet, Ackman still manages multiple entities, including his UK-listed investment trust and a legacy hedge fund. 

On the salary front, several reports say Buffett takes a modest $100,000 as the $1 trillion asset management startup CEO annually, but Ackman proposed that Howard Hughes pay Pershing Square a 1.5% fee based on market capitalization, which critics believe makes his structure less shareholder-friendly.

Time is on Bill Ackman’s side

One advantage Ackman may have over Buffet is time. At 58, he is the same age Buffett was when Berkshire first listed on the New York Stock Exchange in 1988, with a market cap of just $5.8 billion. 

As of Wednesday, February 26, 2023, Pershing Square manages just over $16 billion in assets, while Berkshire now holds a market capitalization exceeding $1 trillion. 

Buffett currently owns about 189 operating companies, not to mention a bulky stock portfolio. In the next 30 years or so, Pershing’s CEO will have to take up the challenge of finding a way to replicate that level of compounding growth.