Billionaire investor Bill Ackman has cashed in $2.6bn from bets that companies would struggle to pay their debts, less than a week after warning the American people that “hell is coming” as a result of coronavirus. The founder of Pershing Square told investors on Wednesday that he was ploughing the winnings into the equity market, saying he believed the US government was “all-in” to mitigate the damage the virus has inflicted on the economy. Pershing Square disclosed this month that it had paid $27m for credit protection on investment grade and high-yield bonds to add to existing positions at “deeply discounted prices”. In an emotional interview with CNBC last week, Mr Ackman said he became increasingly bearish in January after waking up from a nightmare about the virus. He called on the US government to impose a month-long shut down to stop the spread. The credit protection trades — using derivatives tied to the perceived creditworthiness of corporate borrowers — helped shield Pershing Square’s $6.5bn portfolio from the US stock market’s fastest-ever bear market. Its funds were down 6.5 per cent for the year to mid-March and updated figures were due shortly. Last year the firm recorded a gain of 58 per cent, net of fees, after four consecutive years of losses. Encouraged by the Trump administration’s approach to the economic fallout, Mr Ackman said he this week removed all the hedges he had put in place and was now betting heavily on a US recovery. “We became increasingly positive on equity and credit markets last week, and began the process of unwinding our hedges and redeploying our capital in companies we love at bargain prices,” he wrote in a letter to investors on Wednesday. Pershing Square has bolstered its stakes in Burger King-owner Restaurant Brands International, DIY retailer Lowe’s and Warren Buffett’s Berkshire Hathaway, as well as hotel operator Hilton, which Mr Ackman warned last week could “go to zero” if no action was taken by the government. The investor also bought a stake in Starbucks, the coffee-house chain he sold out of this year after banking a 73 per cent return. Pershing Square has also added a stake in private equity group Blackstone, which lost 25 per cent of its market value in the past month. Even during the CNBC interview predicting catastrophic effects from coronavirus on the economy, Mr Ackman said he was buying stocks “aggressively”, later adding on Twitter that he saw “bargains of a lifetime”. US stocks had their best day since the last financial crisis on Tuesday, as US congressional lawmakers closed in on a potent fiscal stimulus package to alleviate the economic effects of the virus. https://www.ft.com/content/6c3d3e18-2d6e-4c38-a82d-a0ac18d1eb8b
I'm finding this "bargains of a lifetime" and the biggest buying opportunity ever just hilarious, reason is because just a month ago at historical market highs all I heard was that was the best buying opportunity and that "fear of missing out" was going have every investor buying the continous highs in the market day after day after day. Now all of the sudden the market collapses and the globe is in a full blown crisis and now all of the sudden everything is a buying opportunity....its extremely amusing how wallstreet psychology works.
If you ignore the virus, he's right. Cash is trash was "growth is going to end, central banks will have to basically give out money to spur growth therefore cash is trash."
Ray Dalio is an average investor at best. If you look at his pure alpha and all weather funds, he's basically performed not much better than the market since inception. He's an example of a great salesman getting rich people to hand over their money while he just puts it into blue chip stocks and waits to collect fees.
Sure do..... And here it is. 27-29 seconds in Cash is trash. If you listened to him that day you would have lost 30% of your money in only weeks....I find it amusing that no matter what the situation nearly 99% of people on these shows will tell you never ever ever ever ever ever ever have cash sitting somewhere doing absolutely nothing. Always put it to work, well these people telling you this, you know the average investor really dont have millions of dollars or 6 or 7 figure dollar salaries so reacting to such a statement should differ from one individual to another.
I've been bearish on the market for a couple years, but I do think some great opportunities are presenting themselves (assumes planet gets control of the corona nightmare and we start seeing some positive headlines in coming months). If you bought an equal amount of PK, DXC, JBLU, NRZ, MRO today and tucked them away in a drawer and didn't look at them, I bet you'd see about a 300% cumulative return in the next 3-5 years. Definitely some bargains now showing up in energy, hotels, transports, mortgages and others....most fertile hunting ground I've seen since the mini-swoon in 2011.