Billionaire investor Bill Ackman has liquidated the sizeable coronavirus hedges his firm, Pershing Square, built at the beginning of March. Essentially, Ackman has called a temporary market bottom, and quickly redirected most of the $2 billion-plus windfall from those investments into a basket of stocks that are now trading at bargain-bin discounts.
Ackman's market moves
In a letter to Pershing Square investors, Ackman said that the market hedges had served their purpose and generated substantial profits in just a couple of weeks. The coronavirus pandemic is nowhere near its conclusion, and Ackman suggests that what the United States needs now is a 30-day lockdown imposed at the federal level.
Pershing directed some of the proceeds from those hedges into funding Covaxx, a small biomedical company recently formed as a subsidiary of closely-held United Biomedical. Covaxx has already produced and delivered more than 100,000 coronavirus testing kits in China and America, and with the help of Pershing's funding, it hopes to scale up its manufacturing rapidly and deliver hundreds of millions more.
Ackman's firm also sees outsize investment opportunities in the current stock market. He says Pershing is investing in "companies we love at bargain prices that are built to withstand this crisis, and which we believe will flourish long term."
Without disclosing exact stock-by-stock investment details, Pershing added to its holdings in a broad array of companies, including hospitality giant Hilton (H 10.79%), home improvement store chain Lowe's (LOW 0.89%), Burger King, Tim Hortons, and Popeyes parent Restaurant Brands (QSR 1.00%), scientific technology veteran Agilent (A 0.01%), and insurance-based conglomerate Berkshire Hathaway (BRK.A 0.55%) (BRK.B 0.50%). Pershing also restarted a position in coffee-shop chain Starbucks (SBUX -0.17%), which it had exited earlier this year.
Ackman expects the markets to remain volatile as the coronavirus crisis continues, and remains open to the idea of further trades or reestablishing hedges as the situation evolves.
"We are in one of the most challenging periods of time for our country, and for the world," he wrote. "Learn from this we must."