Here’s Why Howard Hughes Corporation (HHC) Became Clark Street Value’s “Perennial Value Trap”

Clark Street Value, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be seen here. An annual portfolio return of 74.99% was recorded by the fund for the year 2021, versus 28.71% for the S&P 500, and an IRR since the inception of 29.12%.  over the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Clark Street Value, in its Q4 2021 investor letter, mentioned The Howard Hughes Corporation (NYSE: HHC) and discussed its stance on the firm. The Howard Hughes Corporation is a The Woodlands, Texas-based real estate development and management company with a $5.5 billion market capitalization. HHC delivered a -0.25% return since the beginning of the year, while its 12-month returns are up by 20.75%. The stock closed at $101.53 per share on January 12, 2022.

Here is what Clark Street Value has to say about The Howard Hughes Corporation in its Q4 2021 investor letter:

Howard Hughes Corporation (HHC) is my perennial value trap, but the pitfall of their diversified real estate model is also a benefit, the company is attempting to reposition the narrative back to a land developer for home builders and building sunbelt apartments.  They recently purchased a massive plot of land west of Phoenix that apparently has a 50 year development life and will add potentially logistics/warehouse and single family rentals (they’re also building these in their Bridgeland MPC) to their product mix.  In disposition news, this week the Wall Street Journal is reporting that they’ve sold 110 N Wacker in Chicago for more than $1B (HHC has JV partners here, the property has debt, but that exceeded my expectations for a covid office sale).  They’re still too heavy on office for my liking (about 50% of NOI) but have essentially stopped new development in that sector in favor of covid beneficiaries.”



Our calculations show that The Howard Hughes Corporation (NYSE: HHC) failed to obtain a mark in our list of the 30 Most Popular Stocks Among Hedge Funds. HHC was in 25 hedge fund portfolios at the end of the third quarter of 2021, compared to 25 funds in the previous quarter. The Howard Hughes Corporation (NYSE: HHC) delivered a 12.57% return in the past 3 months.

In November 2021, we also shared another hedge fund’s views on HHC in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

Disclosure: None. This article is originally published at Insider Monkey.