Bill Ackman’s move with Howard Hughes Holdings is certainly ambitious, but it also highlights just how misunderstood the Berkshire Hathaway model often is (Due Diligence, FT.com, May 15).
At its heart, Berkshire wasn’t built on structure — it was built on trust. Charlie Munger described it best as a “seamless web of deserved trust”, not layers of compliance or convoluted incentives. Berkshire worked because it relied on a culture of personal responsibility, modest compensation, conservative accounting and extraordinary discipline.
Howard Hughes, as it stands, carries a much higher cost of capital and is introducing a fee structure — two major departures from the Berkshire ethos. If this is a copycat, it’s starting with the wrong DNA. And while Ackman has certainly had big wins, his record also includes some high-profile misses that came from aggressive financial engineering — the very thing Munger warned leads good people astray. The real lesson isn’t just about holding stakes in good businesses. It’s about the values embedded in how decisions are made, incentives are aligned and how leaders behave when no one is watching. That’s not something you can bolt on — it has to be built from the ground up.
James Lindstrom
Founder & CEO, Verdian Insights, Greenwich, CT, US
