Trade Note: Can a Buffett Wannabe Make it Work?

Bill Ackman got some fortunate timing with his “I’m gonna build the next Berkshire Hathaway” deal closing on Monday — Pershing Square finally took control of Howard Hughes (HHH), sort of as planned a few months ago but with, I’d say, a less-ugly compensation structure than Ackman had originally proposed, and a more generous offer.

Here’s how I described that deal back in January:

“… like so many Ackman deals, this proposed partial takeover of Howard Hughes seems to get more convoluted and self-serving the more you look at the details. You can see why people hate this kind of thing — Ackman is essentially proposing that his management company (Pershing Square itself, not the Pershing Square Funds), will buy 10% of Howard Hughes, and make Howard Hughes borrow a ton of money to buy another 5%, and Pershing Square Holdings (their main fund) will keep its 38% stake, and we’ll then leave about a third of the company to be publicly traded… but will have 49% voting control at Pershing Square, and will take over executive leadership of the company, and will use this as an investment vehicle, putting surplus cash (or more borrowed cash) that Howard Hughes generates into other investments as an investment holding company… and charge Howard Hughes a 1.5% annual management fee (of the market cap of Howard Hughes) for Pershing Square to manage this holding company to be like the next Berkshire Hathaway.

“So in some ways, this kind of replaces the failed Pershing Square USA fund as a new ‘permanent capital’ entity that will generate high management fees for Pershing Square (though no performance-based fees, and of course no double-dip on the fees for the portion that Pershing Square Holdings already owns… though they will charge that 1.5% management fee to the public shareholders who roll their holdings over into the new Howard Hughes and continue to own roughly a third of the company, so this ends up creating a new cash stream of something like $45 million a year for Ackman and his employees at the management company… more if the market cap goes up, less if it goes down).

“It’s kind of sneaky without being necessarily evil, and it’s a takeover of other peoples’ capital without really committing to a full takeover, for an asset that has been a major laggard for Bill Ackman’s investors for more than …