Bill Ackman makes $2.6bn in credit market rout

Billionaire investor Bill Ackman has cashed in $ 2.6 billion in bets against the global debt markets, less than a week after warning the American people that “hell is coming.”

The founder of Pershing Square told investors on Wednesday that he is investing gains in the stock market now that the United States federal government is “all-in” to mitigate the damage the coronavirus has inflicted on the economy.

Pershing Square revealed earlier this month that it purchased $ 27 million in credit protection on good quality, high yield bonds to supplement its existing positions and reinstate new ones at “deeply discounted prices”.

In an emotional interview with CNBC on March 18, Ackman said he had become more and more bearish in January after waking up from a nightmare about the virus. He called on the US government to impose a one-month halt to stop the spread.

Credit protection operations have helped protect Pershing Square’s $ 6.5 billion portfolio from the fastest declining market in the U.S. stock market. Its funds have decreased by 6.5% for the year until mid-March and updated figures are expected shortly. Last year, the company posted a 58% gain, net of fees, after four consecutive years of losses.

Encouraged by the Trump administration’s approach to the economic fallout, Mr. Ackman said that earlier this week he had removed all the blankets he had put in place and is now betting heavily on an American recovery.

“We got more and more positive in the equity and credit markets last week, and started the process of unwinding our hedges and reallocating our capital to companies we love at unbeatable prices” , he wrote in a letter to investors on Wednesday.

Pershing Square has increased its stakes in Burger King, owner of Restaurant Brands International, in Lowe’s DIY stores and Warren Buffett’s Berkshire Hathaway, as well as in the Hilton hotel, which Ackman warned last week that he could ” go to zero ”if no action was taken by the government. The investor also reinstated a stake in Starbucks, the coffee chain he left earlier this year after cashing in a 73% return.

Pershing Square also added a stake in the private equity giant Blackstone, whose share prices have dropped nearly 25% in the past month.

Even in a CNBC interview predicting the catastrophic effects of the coronavirus on the economy, Ackman said he was buying stocks “aggressively”, later adding on Twitter that he had seen “the bargains of a lifetime “.

US stocks had their best day since the last financial crisis on Tuesday, when lawmakers in the US Congress closed a strong fiscal stimulus package to mitigate the economic effects of the virus.

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