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Bill Ackman just placed another big bet against the credit markets as coronavirus cases rise across the country.
The billionaire investor said he bought insurance worth $ 8 million that will pay off if companies start to default on debts, as they did when the virus shut down the economy in spring.
The bet is almost identical to – although only 30% of its amount – his now famous hedge at the end of March, in which he bought $ 27 million in credit default swaps that brought him a staggering profit of $ 2.6 billion. of dollars.
“I hope we lose money on this next blanket,” Ackman said at a Financial Times conference Tuesday. “We are in a dangerous period in general and what is fascinating is that the same bet we made eight months ago is available under the same conditions as if there had never been a fire and on the likelihood that the world is going well.
Ackman said he created his new cover the day Pfizer announced its promising new vaccine against COVID-19. Pfizer’s announcement was “actually bearish,” Ackman said, predicting that this will cause Americans to become complacent about wearing masks, allowing the deadly virus to spread even further.
When Ackman went into profit on March 23, there were just over 10,000 new cases of COVID-19 across the country. As of Tuesday, the new cases were just under 140,000, a dizzying number that stoked fears of a second lockdown.
While he sees a short-term risk, Ackman predicted “a robust recovery” in 2021.
Ackman’s transaction in the spring heavily boosted its hedge fund, whose performance had been fragile in recent years. His fund, which had fallen 7% before the pandemic, turned the windfall of credit swaps into new bets on equities and is now up 44% this year.
Ackman, meanwhile, is sitting on a $ 5 billion blank check company he used to try to attract big game acquisitions like Airbnb and Bloomberg LP.
Another factor in Ackman’s early trade was Ackman himself.
The company’s rattlesnake came under fierce criticism in March for its role in the information cycle leading up to the shutdowns. On March 18, Ackman tweeted President Trump, recommending that he impose an “extended break week” nationwide to fight the coronavirus.
Later that day, an emotional Ackman called CNBC and warned that “hell is coming.”
“Until a vaccine is made, distributed and injected, we will be going through a period of depression in the country,” Ackman urged. “Millions of people are going to die around the world and up to a million Americans, it’s just math.”
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