Finance

Billionaire investor Bill Ackman posted an 11% gain in March after turning $27 million into $2.6 billion with coronavirus bets

bill ackmanREUTERS/Shannon Stapleton

  • Bill Ackman’s Pershing Square made an 11.1% net gain in March after betting that markets would tank because of the novel coronavirus.
  • The billionaire investor’s hedge fund spent $27 million on hedges that surged in value to $2.6 billion during the market sell-off, balancing out declines in its equity portfolio.
  • Pershing Square recorded a 3.3% net gain for the first quarter, a sharp rebound from its year-to-date loss of 7.1% at the end of February.
  • Ackman last month denied deliberately trying to scare investors to help his hedges, arguing that he was up front about Pershing Square’s strategy.
  • Visit Business Insider’s homepage for more stories.

Bill Ackman’s Pershing Square posted an 11.1% net gain in March after betting that the novel coronavirus would tank the stock market, according to its latest monthly report.

The billionaire investor’s hedge fund spent $27 million on credit-default swaps — which insure the buyer against an asset defaulting — on investment-grade and high-yield credit-default-swap indexes in February.

Those hedges ballooned in value to $2.6 billion after markets plunged last month, roughly offsetting Pershing Square’s losses on its equity portfolio, Ackman said last week.

Read more:GOLDMAN SACHS: These 13 cheap stocks are poised for years of better-than-expected profits — and they’re must-haves as the coronavirus wipes out earnings in 2020

Pershing Square plowed more than $2 billion of the windfall into equities by March 18, before the stock market rallied. Its strategy delivered a 3.3% net gain for the first quarter, marking a sharp rebound from net losses in January and February.

The fund performed especially well in the final two weeks of March, given it was down 6.5% for the year on March 17. Indeed, its net asset value swelled 10% — to $27.72 a share from $25.19 — during that period.

Read more:‘Still too high’: Goldman’s global equity chief lays out 4 reasons why the stock market will melt down further before it fully captures the coronavirus crisis

Critics accused Ackman of manipulating markets last month after an emotional CNBC interview in which he warned of mass casualties, industries collapsing, and a deep recession.

Ackman denied the claims in a letter to investors and a Twitter thread, arguing he had been up front about Pershing Square’s hedges and buying equities.

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