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01. describe what you want to do now with Howard Hughes. You're making a big investment and so how you're dealing with it is a little different from your other aspects of persing. Sure. So my day job, our day job as a firm is we buy minority stakes and companies and we help make them more successful, like to own them for long periods of time, but we're not buying control.

02. We're buying 5% 10% 2% of business, but we're pretty influential shareholder. Um but I've always had you know always admired Mr. Buffett. Um you look at the Brookshire Buffett's history 1955 he started a small partnership. Um by 1962 he started buying a stake in this crappy textile company because it was really cheap.

03. U by 1968 he had control of of a not particularly good business and he was sort of stuck. Um and he sort of got tired of managing money where the money could disappear where people could add and subtract and he kind of wound up his hedge fund. He was an activist hedge fund manager if you go back and follow his history and he took control of this business and he used it uh initially first he bought an insurance company bought a bank and then over time he built obviously trillion dollar uh business and I've always you know he's been a unofficial mentor of mine and I've always thought when you were a youngster you read his letters you read Graham Dodd and you read Forbes right?

04. Yes. All of the above. True story. Yeah. Good. I'm a loyal subscriber. Thank you. Yeah, you helped pay for this today. The return on the subscription has been very high. It's it's you know it's disappointing that media companies don't do better because you know particularly business media can be a very profitable uh read I would say but so uh in terms of Howard Hughes in terms of how so today we own 47% of the company but like you set up a different kind of company than uh you did with the rest a bit like what we're trying to accomplish is really what Buffett's accomplished but instead of starting with a a textile business that was going out of business Howard Hughes is a company that basically builds and owns cities.

05. A very unusual public company, one that has not been recognized, I would say, properly by the market like Buffett is very cheap. And so we own a big stake in the company and we're in the process of either buying or building an insurance company. And the plan is over time to, you know, compound at a high rate over a long period of time, buy companies as opposed to buy stocks.

06. We'll buy stocks in the insurance company portfolio. You know, one of the interesting things about Bergkshire, um, there are insurance companies that do a good job in insurance and there are investment firms that do a good job in investing. What's unique about Berkshire is in the inside of Berkshire is one of the world's most profitable insurance companies, but where the assets of the insurance company are invested in in common stocks.

07. Uh, and so this this is very important that if an insurance companies on its own has got all sorts of regulations about how you can invest. Yes. Yes. But explain to us how if it's owned by a company, you have a lot more flexibility. That's true. So the the regulators set kind of minimum capital levels, but the the relevant measure is the really how the rating agencies think of the business.

08. And that affects your ratings are critical. No one's going to buy insurance from you unless you're a highly rated enterprise. If you're a pure play insurance company, you're much riskier than if you're part of a diversified holding company. So the benefit that Buffett has brought to his insurance subsidiaries is this parent company that is not directly exposed to the insurance industry and is highly diversified with the profitable kind of good businesses.

09. So with that kind of credit support and running a relatively low leverage insurance company, they're writing a relatively small amount of premiums relative to the equity of the insurance company. He's given a lot more flexibility investing the assets of the insurance company and our business plan is the same.

10. So we own 47% of Howard Hughes Persing Square and Persing Square itself is very well capitalized about 30 billion of assets controlling this 47% stake in the company. So Howard Hughes has the benefit of a rich parent so to speak supporting it. Howard Hughes itself is a very good business with about 5 billion of equity capital.

11. And then we started an insurance subsidiary in the context of Howard Hughes and we have the similar kind of flexibility as Mr. Buffett does to invest the assets. If you look at the 21-year history of Persing Square without fees, it's been about a 23% compounded return. Since we've had permanent capital, it's been about a 27 or 28% compounded return over the last uh 8 years.

12. So you take our investment track record and you combine it with an insurance executive who's can build a profitable insurance company and you make money on on both sides. You make money on the liability side of the business, the insurance business creating lowcost liabilities and you make money in the asset side and that's how you can compound at a very nice rate over a long period of time. And we're going to use Howard Hughes to, you know, follow that playbook.