Bill Ackman, a well-known hedge fund manager, is betting that the coronavirus pandemic may hit the US stock market again, just like in March, when the major stock indexes had just soared to record highs. The last time he made a similar bet, he won and made a profit of $2.6 billion in less than a month, or a 10,000% return.
in Financial TimesAt the dealer meeting on Tuesday, Ackman revealed that his hedge fund company Pershing Square Capital Management purchased a set of credit default swap contracts on Monday, which is a financial derivative product to ensure that his company is exempt from Affected by a wave of corporate defaults.
Subscribe to the observer’s daily news
Interestingly, on the same day, Pfizer announced the early success of its experimental COVID-19 vaccine, and the stock brought the stock index to a record high. However, Ackerman fears that this news will encourage people to be cautious about preventive measures and actually worsen the pandemic before the vaccine is put on the market.
Ackerman warned that investors underestimated the severity of the pandemic. In early March, he issued a similar alert just before the state imposed lockdown orders.
“I hope we lose money in the next hedge,” Ackerman said in the event’s keynote speech. Financial Times. “The fascinating thing is that the same bet we made eight months ago can be expressed in the same terms, as if there has never been a fire, and the world may be better.”
Ackerman said the new hedge is about 30% of his bet in the spring.
In late February, when the coronavirus outbreak was in full swing in China but had not yet begun to spread to other parts of the world, Pershing Plaza purchased US$27 million in credit protection to protect the global investment grade and high-yield credit index. Provided insurance for $71 billion in corporate debt.
A week later, major US stock indexes plummeted, and COVID-19 cases skyrocketed. By the end of March, when the market bottomed out, Ackerman had completed the hedging transaction and gained $2.6 billion in revenue.
He used these profits to buy shares in a number of existing portfolio companies, including Agilent Technologies, Berkshire Hathaway, Hilton Global Holdings, and Lowe’s and Restaurant Brands International.