Howard Hughes Holdings Inc. (HHH) Earnings Call Transcript

Thank you for standing by, and welcome to Howard Hughes Third Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Joe Valane, General Counsel. Please go ahead.

Good morning, and welcome to the Howard Hughes Holdings Third Quarter 2026 Earnings Call. With me today are Bill Ackman, Executive Chairman; Ryan Israel, Chief Investment Officer; David O'Reilly, Chief Executive Officer; Carlos Olea, Chief Financial Officer; and Marc Grandisson, Vantage Executive Chair and Howard Hughes Holdings Director. Before we begin, I would like to direct you to our website, www.howardhughes.com, where you can download both our third quarter earnings press release and our supplemental package. The earnings release and supplemental package include reconciliations of non-GAAP financial measures that will be discussed today in relation to their most directly comparable GAAP financial measures. Certain statements made today that are not in the present tense or that discuss the company's expectations are forward-looking statements within the meaning of the federal securities laws. Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that these expectations will be achieved. Please see the forward-looking statement disclaimer in our third quarter earnings press release and the risk factors in our SEC filings for factors that could cause material differences between forward-looking statements and actual results. We are not under any duty to update forward-looking statements unless required by law. I will now turn the call over to our Executive Chairman, Bill Ackman.

Thank you, Joe. Just going to highlight a few significant developments during the quarter, then turn it over to Marc, who is going to walk through the insurance portfolio. Ryan will speak to the investment assets and David will update more detail on the real estate progress. With respect to Vantage, $76.6 million of net tax profit for insurance and reinsurance, including gains from the investment portfolio. Economically, $103 million operating profit, we're adding back purchase accounting adjustments relating to the purchase of Vantage at a premium to book value, that amortization, we believe is a noneconomic expense. In terms of Vantage progress, the most significant during the quarter was Mark taking on the Executive Chair role are recruiting David Gansberg, as the CEO elect to join no later than June when his noncompete expires. And Marc continues to build out the senior leadership team, really taking advantage of his long-time relationships and network in the industry, and we'll update you over time as we make more progress there. Real estate operations generated strong performance. Operating assets, same-store NOI growth of 9%. That's probably a industry-wide to the top number. On the land sale side, also very strong numbers. We lapped a significant $100 million plus bulk lot sale. But in terms of -- without the bulk lot sales year-on-year, we showed good progress. Importantly, what we focus on is really a couple of metrics. One is what's the pace of home sales. Someone was up 11% year-on-year. Woodland Hills up 5% year-on-year, Bridgeland down 9% year-on-year, but up 7% over last year, lot sales are lumpy, depends on our sort of auction process, et cetera, but we feel very good about that sort of leading indicator. And importantly, the land sales price per acre. One of our important metrics when we look at is what's the value -- how much land do we sell over the last year? And what's the value of our -- the land that we have remaining based on current prices. We sold 398 acres over the last 12 months, generated $435 million of proceeds. Meanwhile, our residual value of land based on the current market value went up from $5.623 billion to $5.701 billion. So in effect, we generated $435 million of proceeds plus an increase in our land values. The maintenance free cash flow was up slightly with very significant same NOI growth. I will go into more detail there. We had a modest amount of condominium sales generating -- or $0.8 million of -- excuse me, of profit and we did 2 municipality district receivable sales and I'm going to explain what this is. Basically, as we build out the infrastructure for our MPCs, we recover the cost of that infrastructure in the form of what's called a municipal utility district receivable, which is paid down from tax revenues. We get that -- receivable sits on the balance sheet that's face value, it gets paid out over 3, 4, 5, 6 years, depending upon the pace of development and the generation of taxable income. What we've been doing in effect, think about as a 0 coupon instrument, and we basically have sold that and received the present value of those receivables at about 6%. Discount rate that causes us to generate a GAAP loss of $5 million during the quarter. But what we're really doing is taking this 0 coupon, which is which we're not going to collect or an instrument we're not going to collect for 4 or 5 years, much as 6 years and taking the cash today at a discount rate that we find attractive. The other significant development with respect to real estate during the quarter was our announcement in September at the Annual Meeting have a plan to go to an asset-light model. We've made good progress in terms of recruiting the advisers and actually have already done discussions and received a number of significant offers for assets of the company. We'll report our progress over time, but we are strongly of the view that we're going to achieve our objectives in terms of generating material amounts of cash that we believe to be very attractive valuations. Comment on the other metric to pay attention to, of course, is G&A. This is the first quarter that we're fully including the results of Vantage our year-on-year increase from $34 million of G&A to $51.6 million. The components there basically are $13 million of incremental interest expense and about $4 million to $5 million of G&A from Vantage that is now in our results. Okay. With that, I'm going to turn it over to Marc Grandisson.

Thank you, Bill. Good morning, everyone. As Bill noted, this is our first full quarter as part of how we use, and I'm pleased to report that Advantage delivered solid quarter with earnings, underwriting income and returns, all generally moving in the right direction. A quick reminder, Bill alluded to it already, we like to presentation. How would use consolidated results include is accounting adjustments, largely the amortization of the VOBA. On that basis, Vantage is third quarter combined ratio was 101.8% and the pretax income was $77 million. As in the second quarter, everything is today and the Vantage supplemental is on a historical GAAP basis, excluding purchase accounting adjustments, which gives a clearer picture of how the business is actually performing consistent with historical reporting. On that basis, third quarter net income was approximately $80 million, up 22% from the prior year quarter, and pretax income of $103 million was more than double last year. Year-to-date, net income is $166 million, up 51%. In the quarter, the combined ratio was 94.9%, in line with 95% a year ago and 95.4% year-to-date versus 96% last year. Underwriting income grew 19% in the quarter to $16 million and 38% year-to-date to $41 million. Gross written premiums grew 4% to $386 million and net earned premium grew 17% to $316 million. Year-to-date, gross written premium is $1.4 billion, up 11%. Insurance-related gross written premiums grew 8%, led by construction, casualty and financial lines. Reinsurance-related gross written premiums were down 9% as we deliberately wrote less property in specialty, where pricing no longer meets our return hurdles that is cycle management and practice. We grow where the margin of safety is there, and we step back where it is not. The G&A expense ratio improved to 13.9% from 15.8% a year ago and to 14.3% from 16.9% year-to-date as net earned premiums continue to outpace expense growth. As was mentioned at HHS' Annual General Meeting, we expect to invest more over the next several quarters, and we expect the G&A ratio to be a little bit more volatile. Let me spend a moment on underwriting quality. The accident year combined ratio, excluding catastrophes, was 96.2% versus 96.8% last year and 92.5% year-to-date versus 94.8%. I do want to be transparent that the quarter is above the 91.4% we reported the second quarter. The difference is a single large energy loss in our reinsurance specialty book. There were no significant catastrophe losses in the third quarter. Reinsurance also absorbed about 4 points of adverse prior development which we have addressed conservatively. Excluding those items, reinsurance remains profitable with a 92.2% accident year ratio ex cat in the quarter and 84.4% combined ratio year-to-date. Large losses are part of a specialty underwriter. And as I said last quarter, we expect some fluctuation from quarter-to-quarter. Insurance made real progress. Its combined ratio improved to 96% from 102.6% and underwriting income was $7 million versus a loss of $4 million a year ago with favorable prior year development of 3 points. This is the trend we want to see, and we expect it to continue as the book scales. Net fee income was $13 million in the quarter, up from $9 million and is $47 million year-to-date versus a loss last year. This comes from our advantaged ALS structure and reflects strong outcomes on recent property cat business we wrote for third-party partners. Turning to investments. The transition of the portfolio is now largely complete. We hold $1.3 billion of common equities, $2.4 billion of cash and short-term treasuries and only $11 million of fixed income securities. Net investment results were $77 million for the quarter, driven by $55 million of unrealized gain on equities, a reversal to the second quarter's mark-to-market loss. Net investment income was $23 million versus $30 million last year, reflecting the move out of fixed income. Equity markets will move in both directions, so please judge this portfolio over years, not quarters. We are investing for long-term compounding with expert management by Pershing Square. That brings me to returns and capital. Trailing 12 months after-tax return on equity was 16% compared to 15.9% for 2025 and 9.2% for 2024. And that is consistent with our goal to deploy capital at a target return on equity at or above mid-teens over the cycle. GAAP equity rose to $1.9 billion, up 44% year-over-year, including the $300 million contribution from how we use, combined with earned profits. Our capital remains strong and AM Best continues to rate us A- with a positive outlook. On the market, our review is unchanged from last quarter. We remain primarily in Stage 3 of the cycle, Property rates, particularly in the United States, continue to soften and a few short tail lines are moving towards Stage 4. Casualty remains more constructive. There are uncertainty around development of earlier years and loss trend require a thoughtful approach. Broadly, competition has increased, but pockets of attractive returns remain in a diversified platform lets us move quickly to them. Our priorities are the same, underwriting profit over volume, conservative reserving, and margin of safety and pricing, disciplined management of aggregations, conservative prudential capital management, and investment in data and talent. In closing, we are still in the very early chapters of a multiyear story. The permanent capital is in place, the portfolio transition is behind us, and the underlying trend in underwriting expenses and returns is positive. I look forward to updating you on our progress in the future. With that, I will turn the call over to Ryan.

Thanks, Marc. I thought this quarter, what we could do is talk a little bit more about the investment portfolio and Pershing Square's overall philosophy on the management of that portfolio. And for those of you following along the slides, I'll kind of be referencing Page 23 as we go along. So to start with, our total invested assets grew to about $3.7 billion this quarter. And as we've talked about before, we really employ a barbell strategy. So just over 65% of those invested assets will ultimately be in cash or short-term U.S. treasuries were taking no credit risk, no duration risk. And then we will be investing the bulk of the excess beyond what we would be generating through float over time in our common equities. Today, we actually have a lot more of a cushion relative to the flow that we've invested in short-term treasuries over time, we probably will have a little bit more matching between the short-term investments and our float, and therefore, the percentage of our invested assets that would be in common equities with gold. So when we sort of think about that 65% of the portfolio today that invested in short-term treasuries at current interest rates, that should be yielding around 4% based on the market rates for a 30-day U.S. Treasury to the extent that interest rates stay the same for the roughly 35% of our portfolio that's invested in stocks, what we wanted to provide today was really the investments that we make. And at Pershing Square and for those of you who follow us, we've and they have the competitive moats, the great decisions management is making in their capital allocation strategies, they can really be generating returns from these investments that would be at least 20% a year over kind of a 3- to 5-year type holding period. And when we think about the way in which we're achieving or hope to achieve that 20-plus percent return, it's really buying businesses that can grow their earnings. I would say it's sort of a high teens to roughly 20% rate collectively. And where we try to purchase these businesses at attractive multiples such that over time, our investment return will be a little bit better than the underlying earnings growth of those businesses because investors will ultimately assign a higher multiple of earnings to these companies than what we've paid for them. And so when we kind of take that framework overall, what we're looking for, and we see that's represented very well in the portfolio we have to investments in Vantage that really do represent these durable growth companies, some of the world's great businesses that are generally growing their earnings between 15% and 25% a year over time in our estimation and where we think there's upside from the multiples. Collectively, this portfolio, roughly the way we think about it as it is today, we expect it should be growing its earnings about 20% a year over the next 3 to 5 years based upon our best estimates. And what that sort of means is every quarter, if the multiples stay the same that investors assign to these companies, we would generally get about 1/4 of that 20% growth or about 5% each quarter. And you can actually see this quarter in aggregate, that's exactly what happened. We had a 4.7% return on our common equities, just under that 5% threshold...

You may want to point to the page you're referring to.

Yes, Page 23, exactly for those were falling along. And the way we sort of think about that is that's at the portfolio in aggregate. But when you look at the specific holdings, Obviously, there's a lot more volatility. So to point out a couple of the companies that drove our results this quarter were really our investments in Microsoft and Meta, which were our largest investments. And those collectively returned about 38% for Microsoft, 29% for Amazon. And while the earnings grow on year end, so of that kind of 20% to 25% level, these businesses also had a lot of multiple expansion this quarter as people became more excited about their prospects. And the rest of the portfolio, I would say there was a little bit a different result where some of them had their earnings growth and their share price in line. And some of them actually, for example, a company like Brookfield or Uber actually had a share price declines, even though they had very healthy earnings growth as investors assigned a lower multiple to those businesses. So I just wanted to give you a little bit of insight as to how we're thinking about the stock portfolio that we have. And going forward, our goal is to continue to provide some insights each quarter on how we think about the overall investment portfolio. With that, I'll turn it over to David to talk about the real estate results.

Thank you, Ryan. Against the backdrop of real headwinds, higher mortgage rates and affordability challenges, our real estate business is performing exceptionally well. Over the past 12 months, our annual residential land pricing in our commercial communities increased 18%. Operating assets NOI grew 8% this quarter, and our condominium pipeline now represents more than $5 billion in expected future revenue. Let's start with our MPCs. Land pricing, home sales and the value of our remaining land are the indicators I focus on when evaluating the strength of this business. So let's put the reported numbers in context. We reported $89.5 million of MPC EBT during the quarter, compared to $205 million a year ago. Two items drove that comparison. First, last year's quarter included a 231-acre bulk land sale in Summerlin for more than $100 million. Those transactions are strategic, but they don't occur every quarter. Second, we recorded a $19.4 million remeasurement loss related to the consolidation of Floreo and Arizona. This is a noncash accounting adjustment from taking control of the venture, not a change in what we expect the project to be worth. Adjusting for the bulk sale and the noncash loss, MPC EBT would have been higher this quarter compared to last year. Demand and pricing in our communities are stronger than they were 12 months ago, not weaker. Our average residential land price was approximately $1.3 million per acre this quarter, an 18% increase over the trailing 12 months mentioned during the quarter that net new home sales increased in Summerlin and Woodland Hills, Bridgeland was down in the quarter but still up 7% for the year. What differentiates our communities isn't that we own a large amount of land, it's what we've built on that land over decades. We're not developing residential neighborhoods. We're creating complete communities that attract employers, businesses, retailers and residents. We've proven that strategy in the Woodlands, and we're following that same playbook in Bridgeland with projects like the Houston Texas anchored Toro District. As these communities mature, the jobs, amenities and commercial development create additional demand for housing. That demand, combined with our finite land supply supports pricing and increases the value of our remaining land over time. which is exactly what you see in our land bank. Updated pricing assumptions added approximately $79 million of estimated value this quarter, replacing most of the value -- the 100 acres we sold. Our estimated margin adjusted residual value for wholly owned land is within 1% of where the quarter ago with fewer acres in it. That is long-term value creation that doesn't always show up in quarterly earnings. We also completed the sale of 2 mud district reimbursements in Texas. Bill walked through the details of that. But at the end of the day, we generated more than $177 million in net cash proceeds but also generated $105.4 million GAAP loss. The implied discount rate that we sold those receivables at on a blended basis is just over 6%, accepting a discount today on cash that would otherwise have been collected for years. We expect to redeploy those proceeds at returns well above that rate, which is exactly why we did it. Turning to the operating assets. NOI increased 8% to $73 million with same-store NOI growing at 9%. This growth is primarily resulting from the leasing efforts across our office portfolio which has increased NOI 15% compared to last year on a same-store basis. Adjusted maintenance free cash flow increased 10% over the trailing 12 months to $96.6 million again, boosted by leasing of both the office and multifamily portfolios as we've reached stabilization across the majority of our assets. These results reflect years of investment in commercial multifamily developments throughout our communities. Those assets provide growing recurring cash flow and add value to the residential land around them. Our condominium business is another important source of future cash flow. We contracted 82 units during the quarter, including 66 at Mahana, our newest Ward Village tower in predevelopment. As of September 30, Mahana was 15% presold after only about a month of sales. We've continued to see sales activity since quarter end despite a challenging market. Located at the base of Victoria Ward Park, Mahana offers a distinct opportunity within Ward Village, and we're encouraged by the pricing and buyer interest we've seen. Sales remained in line with our expectations. Across the pipeline, we have 1,743 units under construction or in predevelopment with 62% pre-sold or under contract. That's more than $5 billion in expected future revenue, including approximately $3.6 billion already under contract. What makes this business especially attractive is its capital structure. Buyer deposits and nonrecourse construction financing fund the majority of those development costs, allowing us to deliver these projects with a relatively limited corporate equity, which brings me to something fundamental about Howard use. The cash flow we generate isn't the end of our value creation. It's what funds the next generation of it. We reinvest a portion of that cash into projects like Melia and ‘Ilima in Ward Village and 1 Riva Row Row in the Woodlands and transformational developments like Toro District in Bridgeland. Those investments drive shareholder returns make our communities more attractive, increase long-term net asset value and create the next round of cash flow and the cycle repeats, which brings me to the evolving asset management strategy. As discussed at the shareholder meeting in September, we're increasingly looking to bring third-party capital into our real estate platform through joint ventures and other structures. We don't need to own 100% of every office building, apartment community or commercial development to create value from those assets. By partnering with outside investors, we can unlock equity, grow our development and asset management fee business and keep overseeing the communities we've spent the last 16 years building. We're in active discussions on our first joint venture and expect to make more in the coming quarters. The capital we free up gives us real flexibility. It can be used to redeem the preferred shares, invest [indiscernible] or fund our current growth opportunities in Howard Hughes communities. Our master planned communities remain the foundation of the real estate business and long-term control over their development remains central to the strategy. So when I look at the quarter, I see a real estate business performing exceptionally well in a challenging market. We're maintaining strong land pricing, growing recurring cash flow and building a substantial pipeline of future condominium revenue. And as we evolve our capital structure, we have the opportunity to keep creating that value with significantly less capital tied up in individual assets. I am proud -- I couldn't be more proud of what our team has accomplished this quarter in a challenging environment and confident in the long-term outlook for our communities. So with that, I'll turn it over to Bill for closing remarks.

My only remarks are that the real estate team did a great job, really great quarter. With that, operator, let's open it for questions.

[Operator Instructions] Our first question comes from the line of Anthony Paolone of JPMorgan.

My first question relates to just the planned either joint venture or sales of some of the real estate. Can you maybe give us a sense as to any particular areas you want to sell? And maybe sizing of like how much you expect to receive in proceeds over -- I think, Bill, maybe on a prior call you mentioned being done by the end of '27.

Yes. I would say we're not going to be likely done by the end of '27. I think we're going to make very significant progress by the end of '27. The goal is to -- we think there is value -- our whole strategy about MPCs is about control. Why do we have 9% same-store NOI growth because the competitive dynamics of controlling the real estate in your communities enables you to maintain pricing and obviously, quality and this enables us to generate compound returns both in the value of commercial assets and the value of our kind of land holdings. So we want to maintain control, so we're bringing in more passive partners that like the team with -- this is a team with incredible track record, capability, resources, financial reporting, public company, the ideal partner for pension fund family office that wants exposure to some of the best housing and real estate markets in the country. We have -- I would say some assets that are kind of noncore that we might sell outright, but we've already been fielding offers on major assets that have come in the door since we announced this strategy, and I expect we'll have stuff to report on probably by the next time we have this call. So I can't tell you precisely the time frame. It's not -- we're not in a rush to do it, but we're going to -- we've hired advisers that are engaged, they're incentivized. I would say real estate transactions the earliest I would expect you to hear something would be over in a 3-month time frame. But call it, 6, 9 months from now, you should start to hear significant progress. And I said by the end of next year, the goal of something in order of potentially a couple of billion of incremental proceeds would be a reasonable way to think about it. But that's an approximation. It could be more, it could be less.

Okay. And then if you think about as those proceeds come in, if we think about selling CRE, if we think about sales cap rates and so losing some percentage of those assets as income. Do you think the redeployment, should we think about that as going out at a higher return? Or how do we think about just what that trade looks like on a shorter-term basis as the money comes in and then what you do with it?

Sure. So I think real estate investors, someone is buying an asset at a 6.5% return in a 5.5% financing market and putting up 1/3 of the equity, that's not generally a high return. It's hard to generate very high return. I think people think of real estate as a, call it, I don't know, 8% to 12% return on equity kind of business, I would say, in terms of -- for stabilized assets, maybe somewhat higher for development-type assets. We think we can generate -- Marc mentioned in excess of a 15% ROE, our ambitions are actually to generate in excess of a 20% ROE, both with a combination of strong profitability from the insurance side of the business and from strong investment results, particularly as we get the investment portfolio more invested in common equities and less on treasury. So going from a, let's call it, a 10% ROE business to a 20% ROE business, we think inherently is a good thing. Now our real estate operation, it takes place in a corporation where we have to pay corporate tax. We have some depreciation shield, interest expense, et cetera, still pay taxes. So by bringing in -- taking out, call it, 80%, let's say, of the equity we have invested in an asset and then getting paid fees from managing the assets that are paid by third parties, promotes, et cetera, we think we can take the ROE from a real estate portfolio from the maybe lower double digits to the high teens or potentially more. And so we think both the movement of the capital from real estate to insurance is a big step-up in terms of ROE for the overall business. But by doing so, by bringing in a partner and by becoming more of a asset manager than just a wholly owned real estate subsidiary operation, we -- that transaction is extremely accretive to the entity, both in real estate and insurance.

Our next question comes from the line of Alexander Goldfarb of Piper Sandler.

Yes. And certainly, congrats on having the first full period as a combined company. So a lot of work there. First, David, I'm going to go to Hawaii in the condos you know I like to complement you guys of how successful the presales go, but this latest project, which I think was just 15 units or 15%, it seems a little slower than historic. So just maybe a little bit more color if it's project-specific or maybe just where interest rates are, it's finally countering what normally is a really strong residential sales market out in at Ward Village.

Alex, thanks for the question. Look, I would say that over the past 5 years in Oahu and the condo market in general has been good. I wouldn't say super strong. Over the past 5 years, we built or have under construction 8 towers, the entire rest of Oahu has done 2 where 80% of the island's luxury condominium supply. And I think we've been spoiled by Bonnie Wedemeyer and her team's incredible success of delivering 60% or 70% presold in 60 days. In a more normal market environment where we are today with higher interest rates, getting 15% in 30 days is the celebration, and I tip my cap to them. They've done a great job. Obviously, the last 4 towers are a little bit different than this one. They were all in the front row and right on the beach. And this is at the head of the park set back a little bit. So it was our expectation coming out of the gate that this wouldn't have that type of sales velocity that those front row towers did. And there is a little bit more headwinds with higher interest rates. With all that said, while 15% may be behind those other towers, for us, it's still an exceptional result.

Okay. And then, Ryan, a question on the securities portfolio. And obviously, we left there in the supplemental. The market has been crazy. We had the midterm, had serious durations this week. As you guys think about your securities holdings and as we think about you're seeking to outperform the market, should we expect your book to change meaningfully quarter-to-quarter? Or in general, when you guys make an investment you're making it -- you look through like the type of gyrations that we've had recently, the sort of anti-AI, anti-data center pushback? Like just trying to understand when we look at your cost versus how it's going to look over time as you guys try to outperform to drive earnings to the bottom line or is .

Yes, sure, Alex. And thanks for the question. The way that we think about it is there are really only a few hundred businesses in the world that we think are of the quality that we would want to own them for the long term. And so when we buy those businesses, we really are thinking with a multiyear sometimes multi-decade perspective on where those businesses will develop. And so the opportunities to buy them to have these businesses that grow at such a rapid rate and then to buy them at purchase prices where we can make a return that meets our thresholds, which we talked about as being at least 20%. Those aren't things that come up every day. So my expectation would be in our historical results at Pershing Square, have suggested that we have multiyear holding periods 4-plus years kind of on average, even though some stocks we've held for decades at Pershing Square. And I think that's likely going to continue. The one thing that's quite interesting about investments in an insurance company versus if you think about investments in your sort of typical manner outside of insurance is that the insurance business is cash generative. And if cash generative in 2 ways one, every time we have a combined ratio below 90%, we're going to have profits we have profits from the investment income we generate, whether it's off the cash portfolio or the common equities, those are all things that are going to be allocated every quarter, we have more cash coming in to be invested. And we get to decide how much of those investments will go to equities, how much are going to go into cash. And so what's nice about market volatility, particularly inside of an insurance company like Vantage is can be leaning in and taking more advantage when we get more cash in to be buying additional securities and volatile market times. And so I think that, that is something that's going to allow us to hold our positions for a long period of time while also being able to buy at moments when there's a lot of market volatility. I don't know, Bill, if you want to add in.

Just adding to what Brian is saying, the big dynamic in markets that's sort of taken place over the last decade is increased sort of passive ownership of stock. So index funds are now an increasing percentage, maybe 25%, 30% of almost every public company. That has the effect as these are effectively permanent holders, at least for now, of Ruby flow from the market. And then much bigger amounts of capital controlled by kind of the shorter-term quantitatively driven investment firms that use a large amount of financial leverage, 8x, 10x, 12x type leverage and the huge moves you're seeing, midterms going up, whatever, and then going big down day yesterday, today, who knows -- if you don't look in the last hour, you have no idea which direction the market is going. We are not trying to make money by figuring out which stock is going to go up tomorrow or which stock is going to go up in the next 3 months. What we're doing is we're finding businesses that we are very happy to own for years that earn very high returns on capital. They grow their earnings and revenues at very nice rates over time and that we purchased at prices that we expect we'll generate our ambitions or 20-plus percent rates of return on that portfolio. And the portfolio that we've constructed and then Ryan walked through here is one that we think will achieve that objective and we don't expect to make material changes to it. Absent a massive move in the stock price upward that would get to a place where we think the go-forward return is sort of less attractive plus or minus, as the businesses progress, we expect the stock to progress and absent our change in our view of the business' long-term potential, we're likely to own it. So think of it as a long-dated portfolio that public comp sounds at a 20%-plus rate and we'll only make changes if we think on an after-tax basis, it makes sense to sell, realize a gain, redeploy the capital in a new investment on an attractive basis.