The deal would give hedge-fund manager Bill Ackman’s firm a 48% stake in the company known for master-planned community developments.

Ackman has for months been pursuing Howard Hughes in a bid to create the next Berkshire Hathaway.Berkshire Hathaway was a textile company when Warren Buffett acquired it in 1965. The legendary investor and his partner Charlie Munger merged two other companies — Diversified Retailing and Blue Chip Stamps — with Berkshire in 1978 and 1983 before closing the textile firm's failing business in 1985.

Instead of critiquing the passive trend, Ackman hopes to capitalize on it. “High levels of passive flows increase the importance of index inclusion,” Ackman said, adding that “Pershing Square is actively engaged with some of its portfolio companies to help evaluate index inclusion potential.”