Bill Ackman, Founder of the Pershing Square hedge fund, has again bet big in the futures market on companies not being able to pay their debts.
The fund collected about $2.6 billion in profits from a similar strategy Ackman used last February before the economic shutdown began. He bought a package of large insurance policies linked to the performance of $71 billion in corporate debt. When corporations failed to repay their loans, the insurance policies paid off.
His current wager uses the same strategy but is only about 30 percent as big as his previous one, he told the Financial Times on 11 November during the newspaper’s annual Dealmakers Conference.
Ackman is known as a contrarian but has described himself as an “activist” investor.
Markets have become too complacent about the virus and governments’ willingness to bail out businesses in debt, he said in remarks to conference attendees.
“The same bet we put on eight months ago is available on the same terms as if there had never been a fire and the probability that the world is going to be fine,” he said.
“I hope we lose money on this next hedge,” he added.
Ackman sees a “robust” economic recovery in the long term but “a challenging time” ahead in the next several months.
Pershing Square’s value has gained 44 percent so far this year after losing 7 percent before betting on corporate defaults in February.
TREND FORECAST: Yes, there will be an economic recovery, and it will initially appear to be “robust” following mass vaccination mandates. However, the economic toll that has destroyed tens of millions of businesses and hundreds of millions of lives is, and will be, devastating. Beyond the socioeconomic toll, missing from the mainstream media is the geopolitical fallout that will erupt and economies sink into the “Greatest Depression.”
