Why is billionaire investor Bill Ackman buying when others are selling?


The harsh reality of financial markets means that for every loser there is a winner – however billionaire Bill Ackman appears to have taken a firm stand on the winning side of the stock market crash triggered by the coronavirus in late February.

Ackman, a 53-year-old Harvard graduate, anticipated the crushing impact the health emergency would have on US stock markets and even made it public during a March 18 interview with CNBC where he pointed out that “hell is coming”.

Just days after his comments, his hedge fund, Pershing Square Capital Management, made $ 2.6 billion buying credit protection on investment grade, high yielding credit indices using a variety of complex financial derivatives.

Shortly thereafter, Ackman said, “The proceeds from the hedges have enabled us to become a significantly larger shareholder of a number of companies in our portfolio. This means that the company has liquidated this hedge and is now acquiring strong equity positions in major listed companies, such as Warren Buffett’s Berkshire Hathaway, Starbucks and Hilton hotels.

Ackman predicts that this pandemic will be “a temporary but massive economic shock”

Ultimately, Ackman appears to have gone from being a prophet of disaster to believing in the long-term endurance of the US economy. He said: “Congress is about to pass legislation that will help bring the economy, workforce and citizens closer to our country during what we believe to be a temporary but massive economic shock.”

Ackman graduated from Harvard College in 1988 with an arts degree and started making a name for himself in 1992 when he founded Gotham Partners with fellow graduate David Berkowitz.

During this time, he has evolved into an activist investor who seeks to raise as much money as possible from every deal he concludes, sometimes following eccentric, non-traditional approaches.

He went solo and founded Pershing Square Capital Management in 2004, with $ 54 million of his own cash and support from other investors. The fund currently manages just under $ 6.6 billion for its investors.

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