This post was originally published on this site
“ ‘I hope we lose money on this next hedge.’ ”
That’s billionaire investor Bill Ackman talking at a digital conference to private equity investors and investment bankers this week about his latest wager on what he believes will be a rough stretch for American corporations due to the economic hit from the coronavirus pandemic.
The trade, according to the Financial Times, is virtually the same as the $27-million bet he placed eight months ago, which earned him a whopping $2.6 billion and was hailed in an op-ed in the New York Times as perhaps “the single best trade of all time.”
We’ll see how the latest one, which is about 30% the size, plays out.
“We’re in a treacherous time generally and what’s fascinating is the same bet we put on eight months ago is available on the same terms as if there had never been a fire and on the probability that the world is going to be fine,” the Pershing Square manager said.
So, as he explained, his fund is buying insurance against corporate defaults to reduce equity exposure should the latest push in the market run out of steam. On Wednesday, however, the Dow Jones Industrial Average DJIA, +0.07% was attempting to punch higher. The S&P 500 SPX, +0.55% and the Nasdaq Composite COMP, +1.28% were also climbing.
Ackman said he placed the trade on the day that Pfizer PFE, -1.74% and BioNTech BNTX, -2.08% released positive trial data on their COVID-19 vaccine, which triggered a whipsaw rally in stocks.
In the prominent investor’s view, the news was “actually bearish for the next few months” because it was likely to make people more careless about wearing masks and less likely to fear the virus.
