The philosophy was straightforward: if the position drifted from 8%, I’d rebalance. No rotation, no market timing.

Why I started questioning IEMA

The MSCI Emerging Markets index has become heavily concentrated in semiconductors — TSMC alone sits at ~11.5% of IEMA, with Samsung and SK Hynix adding another ~7%. People talk about the S&P 500 being over-concentrated in the Magnificent 7. Emerging Markets has its own version of that problem, just in semis and specifically in Taiwan and South Korea.

I believe semiconductors are overheated. Yes, AI demand for chips is real and massive — but the valuations have run far ahead of fundamentals.

The first rotation: IEMA → CBUK (partial)

A few months ago I rotated 3% of my portfolio from IEMA into CBUK (iShares MSCI China Tech), keeping 5% in IEMA. The goal was to reduce semi exposure while adding weight to beaten-down Chinese internet and AI names — Alibaba, Tencent, Baidu — that I believe are critical players in China’s AI race. China cannot afford to fall behind, and at some point the regulatory headwinds that have crushed these companies will ease.

The full rotation: everything into KWEB

More recently, I made a more aggressive call: I sold my entire IEMA position and rotated it fully into KWEB (KraneShares CSI China Internet ETF).

I initially considered staying in CBUK, which blends Chinese internet names with some semiconductor exposure. But looking at the relative performance chart between CBUK and KWEB, the two had tracked each other closely for a long time — and recently a gap had opened up in favor of CBUK. That divergence made KWEB look like the more attractive entry.

KWEB is pure Chinese internet: e-commerce, social media, digital services. Zero semiconductor weight. Exactly the exposure I want.

• Semiconductors: IEMA (19.6%), CBUK (9.2%), KWEB (0.0%)

• E-Commerce: IEMA (2.2%), CBUK (20.4%), KWEB (30.2%)

• Internet & Software: IEMA (3.3%), CBUK (22.2%), KWEB (20.5%)

The thesis

Chinese tech names go through cycles — periodic selloffs driven by regulatory fear and macro headwinds, followed by sharp recoveries. These companies are now central to China’s AI ambitions. That’s a structural tailwind that’s hard to ignore.

My play is KWEB vs. EEM: if Chinese internet rebounds while the semiconductor-heavy EM index gets hit by a semi correction, I rotate back from KWEB into IEMA and capture both moves.

Is this more of a value/tactical bet than my usual approach? Absolutely. I’m aware this sits awkwardly in an All-Weather framework. But the confluence of semi overvaluation and Chinese tech undervaluation felt too significant to ignore.

This is not investment advice. These are my personal decisions, shared for informational purposes only. Do your own research and consult a financial professional before making any investment decisions. I'll be posting updates on how this plays out — subscribe so you don't miss them.

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There’s a more rigorous way to think about it.

This piece lays out a systematic rotation strategy between gold and silver using the Gold/Silver Ratio as a signal — what it is, why it might work, what can break it, and why the implementation details matter more than the concept.

Two Decisions, Not One

The first thing to get right is separating two decisions that most investors collapse into one:

Decision 1 — Strategic allocation: How much of your total portfolio should live in precious metals permanently? This is a macro-level call about portfolio construction: hedge against monetary debasement, currency crises, geopolitical tail risk.

Decision 2 — Tactical composition: Within that allocation, what’s the split between gold and silver at any given time? This is a relative value call about two specific assets.

Conflating these is where most precious metals strategies go wrong. Someone buys silver because “it’s cheaper than gold and more upside potential,” which turns a structural allocation into a speculative bet. Or someone stays 100% gold forever, leaving a consistent historical anomaly completely untouched.

Keeping them separate is the foundation of what follows.

What the Gold/Silver Ratio Actually Is

The Gold/Silver Ratio tells you how many ounces of silver it takes to buy one ounce of gold. Today that number sits somewhere in the 80–90 range. Historically, it has oscillated between roughly 30 (silver euphoria) and 100+ (maximum fear, flight to gold).

But here’s the crucial insight: you’re not betting on silver going up. You’re betting on a statistical property — the tendency of this ratio to revert toward its historical range after reaching extremes.

That’s a fundamentally different thesis. And a much more defensible one.

The ratio has a plausible economic anchor: both metals share monetary history, similar mining economics, and correlated demand during financial stress. When the ratio hits 90, silver isn’t “cheap” in absolute terms — but it is historically cheap relative to gold. The question the strategy bets on is whether that relationship has some gravitational pull back toward equilibrium.

Centuries of data suggest it does. But — and this is important — not toward a fixed mean.

The Mechanics: A Rule-Based Rotation System

Here’s the basic framework:

Fixed allocation: 10% of total portfolio in precious metals, always. Rebalanced against the rest of the portfolio using current market values (liquid ETFs).

Internal rotation signal: The Gold/Silver Ratio.

• Ratio above 85 → rotate to silver (gold is historically expensive relative to silver)

• Ratio below 65 → rotate back to gold (silver has recovered toward equilibrium)

The 20-point band between triggers is deliberate. Narrow bands (buy silver at 75, buy gold at 70) generate too many rotations — tax events, spreads, noise. Wide bands sacrifice precision but add robustness. In a tax-sensitive environment, this matters enormously.

Why This Might Work

The strategy has three things going for it:

1. Historical persistence. The ratio has shown mean-reverting behavior across multiple economic regimes, currency systems, and decades. It’s not a perfect oscillator, but the extremes have consistently resolved.

2. Structural logic. Unlike many ratio strategies, there’s an actual economic reason for reversion: gold and silver are partially substitutable as monetary metals, their production costs are correlated, and institutional behavior during crises tends to drag them back into a historical relationship.

3. Behavioral edge. Most retail investors can’t sit patiently in silver when gold is ripping higher. A rules-based system removes that emotional override. The discipline is the alpha.

The Central Risk: Regime Change

Here is where intellectual honesty matters most.

The strategy doesn’t bet on silver. It bets on the stability of the ratio’s distribution. And there are two credible scenarios where that distribution could shift permanently:

Scenario A: Silver industrializes further. Silver’s industrial demand has been growing for decades — solar panels, EV components, electronics, data center infrastructure. If silver increasingly behaves like an industrial metal (copper-like) rather than a monetary metal (gold-like), its correlation with gold weakens. The ratio could structurally reset to a higher equilibrium, say 90–100, as silver’s monetary premium shrinks.

Scenario B: Gold remonetizes. Central banks have been accumulating gold at historically elevated rates since 2022. They are not buying silver. If the global de-dollarization trend continues and gold regains explicit monetary status in reserve frameworks, gold’s premium expands permanently. Again, the ratio’s center of gravity shifts higher — but this time because gold becomes more special, not because silver becomes less so.

In either case, the danger isn’t that the strategy produces one bad trade. The danger is that you wait for a reversion toward a “normal” of 60–70 that never comes because the new normal is 85.

The Binary Rotation Problem

This leads directly to the implementation question that matters most: should rotations be binary (100% gold ↔ 100% silver) or graduated?

Binary rotations are intellectually clean and emotionally satisfying. They’re also fragile.

Consider: you rotate to 100% silver at ratio 90. The ratio sits at 90 for seven years. Gold compounds at 12% annually. Silver compounds at 8%. You’ve been technically correct — the ratio is historically extreme — and you’ve systematically underperformed your alternative. In a portfolio where this 10% block exists primarily for defensive purposes, that’s not a rounding error.

A graduated approach is more robust:

• G/S ratio below 60: 100% gold 0% silver

• G/S ratio 60–70: 75% gold 25% silver

• G/S ratio 70–80: 50% gold 50% silver

• G/S ratio 80–90: 25% gold 75% silver

• G/S ratio above 90: 0% gold 100% silver

This preserves the mean-reversion thesis while maintaining meaningful exposure to gold — the primary monetary metal — even at extreme ratio readings. You still benefit if the ratio reverts. You’re not destroyed if it doesn’t.

The Costs Nobody Models

Before any backtesting looks convincing, run these numbers honestly:

Tax drag. In a high-bracket environment, each rotation triggers a taxable event. Capital gains taxes of 19–30% on realized gains can consume a substantial portion of the tactical alpha you’re trying to generate. A strategy that looks like +2.5% annual alpha pre-tax might be +0.8% post-tax — or negative, in certain rotation frequencies.

ETF friction. Bid-ask spreads on precious metals ETFs are small but not zero. Management fees (TER) compound quietly. Neither matters much in a buy-and-hold structure; both matter in a rotation strategy where you’re transacting on signal.

Opportunity cost of the block itself. If the 10% block exists for macro protection but you’re constantly optimizing its internal composition, you may be solving the wrong problem. The primary objective is portfolio insurance. The secondary objective — tactical alpha within the block — should never compromise the first.

The mental model: run a full simulation with realistic tax rates and transaction costs before assuming the strategy adds value net of all friction. Many strategies that are elegant in theory are marginal in practice.

A Note on Applying This Logic to BTC/ETH

The same framework is tempting to apply to Bitcoin and Ethereum, using the BTC/ETH ratio as a rotation signal.

It’s worth being direct: the analogy is structurally weaker, and the risks are categorically different.

Gold and silver share: centuries of monetary history, physical extraction dynamics, institutional ownership patterns, and a relatively stable economic relationship.

Bitcoin and Ethereum do not. Bitcoin increasingly resembles a digital monetary reserve — scarce, non-programmable, increasingly held by institutions and sovereigns. Ethereum increasingly resembles technological infrastructure — a programmable settlement layer whose value derives from usage and developer adoption. They are not two versions of the same asset. They are two different asset classes that happen to both be called “crypto.”

The ratio between them has no fundamental anchor. If Ethereum loses developer mindshare to competing chains in five years, the BTC/ETH ratio could double permanently — not because of a temporary anomaly, but because the underlying competitive landscape changed. There’s no geological mining relationship to hold it together. There’s no shared institutional demand dynamic.

The historical record is also insufficient. Gold/Silver has decades of consistent data across multiple economic regimes. BTC/ETH has roughly one decade of data, covering a single macro environment (near-zero rates, risk-on), one major technological transition (ETH’s merge to proof-of-stake), and a regulatory landscape that is still forming.

If you must apply rotation logic to crypto, do it with hard position limits (never below 30% in either asset), accept that you’re pattern-trading rather than mean-reversion investing, and size the position accordingly.

The Honest Portfolio Perspective

Here’s the framing that ties everything together.

If your precious metals block is 10% of a meaningful portfolio, even a well-executed tactical rotation generating +2–3% annual alpha on that block produces roughly +0.2–0.3% on total portfolio returns.

That’s not nothing. But it means the primary objective of this block — preserving wealth, providing uncorrelated returns during equity crises, hedging monetary debasement — should never be sacrificed for tactical optimization.

The rotation strategy makes sense as a secondary feature layered on a sound structural allocation. It becomes dangerous when it becomes the primary reason to own the block.

Own the metals because they belong in your portfolio. Rotate between them because the ratio offers a disciplined, historically grounded signal. Know the difference between the two.

Summary: What This Strategy Gets Right, and Where to Be Careful

Strengths:

• Separates strategic allocation from tactical composition — a distinction most investors miss

• Uses a ratio with genuine economic logic and centuries of data

• Rule-based system removes emotional decision-making at market extremes

• Wide trigger bands (85/65) reduce rotation frequency and friction

Modifications worth considering:

• Replace binary rotations with graduated bands (75/25 increments) to reduce regime-change risk

• Model tax drag explicitly before assuming positive net alpha

• Keep the block’s defensive function primary; rotation is secondary

Risks to monitor:

• Structural shift in silver’s identity (monetary → industrial) changing ratio equilibrium

• Accelerated gold remonetization by central banks widening the ratio permanently

• Extended periods where the ratio is “wrong” by historical standards but remains there for years

BTC/ETH verdict: The logic doesn’t transfer cleanly. Different asset types, insufficient history, technology risk. Proceed with smaller position limits and lower conviction.

This post represents a framework for thinking about precious metals allocation, not financial advice. All investment decisions carry risk and should be made in the context of your full financial situation.

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Introduction

Howard Hughes Holdings (NYSE: HHH) is a U.S. real estate company with a distinctive business model centered around the development and management of large-scale Master Planned Communities (MPCs) in high-growth markets.

Unlike traditional developers focused on individual projects, HHH acquires vast land positions and develops them over multi-decade periods, gradually creating integrated urban ecosystems that combine residential neighborhoods, office space, retail, hospitality, entertainment, and infrastructure.

This long-duration approach allows the company to continuously unlock value as infrastructure, population density, and commercial activity mature over time. In many ways, HHH operates more like a long-term land and infrastructure platform than a conventional real estate developer.

In recent years, the company has also begun transitioning toward a broader permanent-capital holding company model under the influence of Bill Ackman and Pershing Square.

Company History

Origins: Howard Hughes and Summa Corporation

During the 1940s–1970s, businessman and aviator Howard Hughes consolidated many of his assets — including airlines, television stations, casinos, hotels, and real estate — under Summa Corporation.

One of the most important acquisitions occurred in the 1950s, when Hughes purchased approximately 25,000 acres of desert land west of Las Vegas for around $3 per acre. That land eventually became Summerlin, now one of the most successful MPCs in the United States.

Transition Toward MPCs

Following Hughes’ death in 1976, many of the conglomerate’s operating businesses were sold or dismantled. Over time, management recognized that the combination of residential land development and ownership of adjacent commercial real estate produced exceptionally attractive economics.

The company increasingly focused on MPC development and was eventually renamed Howard Hughes Corporation.

GGP Bankruptcy and Spin-Off

HHH later became part of General Growth Properties (GGP), a major mall operator that entered bankruptcy during the Global Financial Crisis.

Bill Ackman played a major role in the restructuring process and ultimately separated Howard Hughes into an independent publicly traded company in 2010.

Seaport Spin-Off (2024)

In 2024, HHH spun off Seaport Entertainment, separating several entertainment-heavy Manhattan assets that required substantial capital and operational focus.

The transaction simplified the company structure and transformed HHH into a more focused MPC and real estate development platform.

Traditional Business Model

The company’s core business revolves around the development of Master Planned Communities.

This process typically follows several stages:

1. Land Acquisition

HHH acquires large strategic land positions in markets expected to experience long-term population and economic growth.

2. Master Planning and Zoning

The company designs long-term integrated communities including residential districts, retail, office space, schools, parks, and transportation infrastructure.

3. Infrastructure Development

HHH invests heavily in roads, utilities, landscaping, drainage systems, and other foundational infrastructure.

4. Residential Land Sales

Once infrastructure is completed, the company sells finished lots to homebuilders, who then construct and sell homes to end customers.

5. Development of Income-Producing Assets

In parallel, HHH retains ownership of selected commercial, multifamily, office, and retail assets inside its MPCs.

These properties generate recurring Net Operating Income (NOI) and create long-term recurring cash flows.

6. Optional Monetization

From time to time, mature assets may be sold to recycle capital into new developments or debt reduction.

Valuation Framework

Valuing Howard Hughes Holdings requires looking beyond quarterly earnings and focusing primarily on Net Asset Value (NAV).

Net Asset Value (NAV)

Many analysts believe the market value of HHH significantly understates the value of its land bank, stabilized assets, and long-term development pipeline.

MPC Economics

Several MPCs — particularly Summerlin and Bridgeland — continue generating record land sales and strong operating margins.

Free Cash Flow Evolution

As multifamily and office developments stabilize, recurring cash flows increasingly cover corporate overhead and debt servicing requirements.

Over time, this could reduce the company’s dependence on cyclical land sales.

Key Assets

A. The Woodlands (Texas)

The Woodlands is HHH’s most mature and stabilized MPC, with a population of roughly 123,000 residents.

Most of the developable land has already been monetized, making the asset function more like a stabilized cash-flow platform.

Main Assets

• Hughes Landing office complexes

• Luxury multifamily assets

• Retail centers

• Proximity to major corporate campuses including Occidental Petroleum and Exxon-related infrastructure

Cash Flow Generation

The Woodlands generates approximately $200 million annually in recurring rental revenue across office, residential, and retail segments.

The region also benefits from long-term corporate migration trends into Texas.

B. Summerlin (Las Vegas)

Summerlin is arguably HHH’s flagship MPC.

Built on the original desert land acquired by Howard Hughes decades ago, it has evolved into a major urban ecosystem with approximately 127,000 residents.

Asset Profile

• Downtown Summerlin retail district

• High-end residential communities

• Modern office developments

• Significant remaining land inventory

Economics

Summerlin produces extremely attractive land sale margins, with some transactions reportedly generating cash margins approaching 80%.

As remaining premium land inventory declines, pricing power may continue increasing.

Many investors view Summerlin as a near-monopoly luxury development platform in Las Vegas.

C. Columbia (Maryland)

Located between Washington D.C. and Baltimore, Columbia is a mature MPC with limited future expansion capacity.

The asset base is heavily oriented toward medical-office properties and multifamily real estate.

The region benefits from strong long-term occupancy trends driven by nearby healthcare infrastructure.

D. Teravalis (Arizona)

Formerly known as Douglas Ranch, Teravalis represents HHH’s largest long-term development opportunity.

The project could eventually support more than 100,000 residents over several decades.

Early Economics

Initial land sales have already begun at attractive pricing levels.

Key Risk: Water Rights

The primary uncertainty surrounding Teravalis involves Arizona water regulation and long-term water availability.

Although management is pursuing mitigation strategies, including recycling and optimization technologies, water access remains one of the most important risks to the long-term thesis.

E. Ward Village (Hawaii)

Ward Village is a luxury mixed-use development located in Honolulu.

Unlike HHH’s continental MPCs, Ward Village focuses primarily on high-end vertical residential development.

Competitive Advantage

The project benefits from an extremely limited supply of premium oceanfront development opportunities.

Economics

The development has already generated billions of dollars in cumulative sales and still maintains a substantial future pipeline.

Additionally, HHH retains ownership of selected retail assets within the district, generating recurring commercial income.

Sum-of-the-Parts Valuation

A simplified sum-of-the-parts framework suggests that HHH’s intrinsic value may materially exceed its public market valuation.

Stabilized Operating Assets

Estimated values for stabilized office, multifamily, and retail assets collectively imply several billion dollars of gross asset value.

After subtracting associated debt, these assets alone may justify a significant portion of the company’s market capitalization.

Land Bank Value

HHH owns one of the largest strategic land banks among publicly traded U.S. developers.

Given current absorption rates and development timelines, some analysts estimate that HHH possesses enough inventory to continue monetizing land for multiple decades.

Estimating the present value of this land bank is inherently difficult due to the extremely long duration involved.

Hawaii Development Pipeline

Ward Village alone could contribute several hundred million dollars of additional net value over time.

Intrinsic Value Estimate

Combining:

• stabilized operating assets,

• the land bank,

• Hawaii developments,

• cash balances,

• and net debt adjustments,

many investors conclude that HHH’s intrinsic value likely exceeds the current share price by a substantial margin.

Some estimates place conservative NAV around $90 per share, while management has previously referenced figures closer to $118–$120 per share.

The ultimate value could be significantly higher if Teravalis successfully replicates the historical trajectory of Summerlin or The Woodlands.

Bill Ackman and the “Baby Berkshire” Thesis

Through Pershing Square and affiliated vehicles, Bill Ackman now controls approximately 46–47% of HHH.

Ackman has publicly expressed interest in transforming HHH from a traditional real estate developer into a permanent-capital holding company inspired by Berkshire Hathaway.

The Vantage Acquisition

In late 2025, HHH announced the acquisition of Vantage Group Holdings for approximately $2.1 billion.

The strategic rationale closely resembles Berkshire’s historical model:

• generate insurance float,

• obtain low-cost capital,

• reinvest excess capital into long-duration investments.

Meanwhile, the MPC business would continue operating as a recurring cash-generation engine.

This raises the possibility that HHH could evolve into a hybrid structure combining:

• real estate,

• insurance,

• infrastructure-like cash flows,

• and eventually public equity investments.

Sources of Uncertainty

Despite the long-term upside narrative, several major risks and uncertainties remain.

Structural Complexity

Even as a pure real estate company, HHH was difficult for the market to value.

The addition of insurance operations and a potential holding-company structure increases complexity substantially.

Execution Risk

The acquisition of Vantage introduces HHH into a new industry outside its traditional expertise.

Insurance businesses only create value if underwriting discipline remains strong.

Weak Recent Financial Results

Recent earnings reports have disappointed investors, with declines in:

• net income,

• quarterly profitability,

• and adjusted operating cash flow.

These results have reinforced market skepticism.

Governance Concerns

Pershing Square’s growing influence creates potential conflicts between minority shareholders and Ackman-controlled entities.

One of the biggest concerns is whether future value creation remains inside HHH or migrates toward Pershing-related vehicles.

Pershing Square USA (PSUS)

In 2024, Ackman announced plans to launch Pershing Square USA (PSUS), a publicly traded closed-end investment vehicle.

The original ambition was extremely large, initially targeting one of the biggest investment fund launches in history.

However, institutional demand proved weaker than expected, leading to a temporary cancellation and redesign of the offering.

The vehicle was eventually relaunched in 2026 with a revised structure.

Why PSUS Matters for HHH Investors

The existence of PSUS creates an important strategic question:

Where Will the Compounding Engine Ultimately Sit?

Several future structures are possible:

Scenario A — HHH Becomes the Compounder

HHH internally retains:

• MPC cash flows,

• insurance float,

• and a growing investment portfolio.

In this scenario, HHH could evolve toward a Berkshire-like structure.

Scenario B — HHH Becomes the Capital Base

Alternatively, HHH could function primarily as:

• an asset-heavy cash generator,

• while Pershing entities capture the higher-multiple asset-light investment management economics.

This would resemble the broader Brookfield ecosystem:

• operating assets remain inside capital-heavy vehicles,

• while the premium valuation migrates toward the management platform.

In such a structure, HHH could still remain valuable, but the long-term upside profile for minority shareholders would likely be lower.

Potential Privatization Risk

One of the most discussed risks among investors is the possibility that Ackman eventually privatizes HHH.

If Ackman believes intrinsic value is materially above market price, acquiring the remaining shares could become economically attractive.

This creates a paradoxical situation for minority investors:

• a low share price may increase frustration in the short term,

• but it could also increase the probability of a take-private transaction at a meaningful premium.

Since Pershing previously purchased shares in much higher price ranges, many investors believe any future acquisition would likely need to occur at prices materially above current trading levels.

Berkshire vs Brookfield: The Core Strategic Debate

At the center of the HHH thesis lies one critical question:

Will HHH Become More Like Berkshire Hathaway or Brookfield?

Berkshire Hathaway Model

Under the Berkshire structure:

• everything remains under one roof,

• operating businesses,

• insurance,

• investments,

• and capital allocation.

The shareholder participates directly in the entire compounding engine.

Brookfield Model

Brookfield took a different path:

• management businesses received premium valuations,

• while capital-heavy assets remained in separate vehicles.

This structure often produces superior market multiples for the asset-light management entities.

Some investors fear Ackman could pursue a similar architecture:

• keeping MPCs and insurance inside HHH,

• while the most attractive investment-management economics migrate toward Pershing-related entities.

In that case, HHH could evolve into:

• a financing vehicle,

• a utility-like compounder,

• or a hybrid REIT/insurance platform.

Such an outcome would not necessarily be bad, but it would fundamentally change the investment thesis.

Future Scenarios

Possible long-term outcomes for HHH include:

• Berkshire-lite: Internal reinvestment engine combining MPCs, float, and investments

• Markel-like structure: Conservative compounder with operating businesses and investments

• Brookfield-style ecosystem: Asset-heavy HHH + asset-light Pershing platform

• Utility-like vehicle: Stable cash flows and dividends with lower growth

• Privatization: Ackman acquires remaining shares

• Permanent value trap: NAV grows but market discount persists

The ultimate shareholder outcome depends less on whether HHH owns valuable assets — and more on where future compounding economics ultimately reside.

Conclusion

Despite the complexity and uncertainty, HHH appears to offer a highly asymmetric risk/reward profile at current prices.

Even under relatively conservative assumptions, the underlying value of:

• MPCs,

• stabilized assets,

• land inventory,

• and future development rights,

may materially exceed the company’s public market valuation.

The central question is no longer simply whether HHH is undervalued.

Instead, the key issue is whether minority shareholders will fully participate in the long-term compounding engine that Bill Ackman is attempting to build.

At current prices, HHH may represent:

• a discounted real-asset platform,

• a future Berkshire-style compounder,

• or a utility-like permanent-capital vehicle.

Each outcome implies a very different long-term return profile.

We currently hold an approximate 2.6% portfolio allocation to HHH at an average purchase price near $63.6 per share and may increase the position during periods of additional weakness.

This document represents personal analysis and should not be considered financial advice or a recommendation to buy or sell securities.

Future updates and follow-up analysis on Howard Hughes Holdings will continue to be published as the story evolves.