Josh Kaufman's questions to Howard Hughes Holdings Inc (HHH) leadership • Q2 2025
Question
Josh Kaufman asked about the company's approach to macro hedging, specifically how positions like credit default swaps (CDS) would be constructed and sized within Howard Hughes Holdings.
Answer
Executive Chairman William Ackman and CIO Ryan Israel explained they would use asymmetric hedges episodically to protect against "black swan" risks. The positions would be sized so that a potential loss would be immaterial, but a payoff would be substantial. Ackman provided the 2020 CDS trade at Pershing Square as a real-world example of a strategy that Howard Hughes could have employed to its benefit, had it possessed the capability at the time.