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

bill ackman

REUTERS/Shannon Stapleton

  • Bill Ackman's Pershing Square made an 11.1% net gain in March after betting that markets would tank due to 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 denied that he deliberately scared investors to help his hedges last month,arguing that he was up front about Pershing Square's strategy.
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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.Advertisement

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: 'We are in an unprecedented moment of global distress': Read the full memo billionaire Ken Griffin sent to Citadel employees on the coronavirus crisis

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% - from $25.19 to $27.72 - during that period.

Read more: Wall Street's disaster playbook never included work-from-home trading. Insiders explain how banks rapidly adjusted during one of the most chaotic markets in history.Critics accused Ackman of manipulating markets last month after he warned of mass casualties, industries collapsing, and a deep recession during an emotional CNBC interview last month.Advertisement

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

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