Bill Ackman Places Another Big Bet Against The Credit Markets

Pershing Square Capital Management founder Bill Ackman, who back in March turned a $27 million position into $2.6 billion through CDS on corporate debt indexes, has placed another bet on a decline in credit markets as new COVID-19 case numbers surge.

The billionaire investor told a Financial Times conference on Tuesday that he has bought roughly $21 billion in insurance against corporate defaults that will pay off if companies start defaulting on their debt.

“We are in a treacherous time generally and what’s fascinating is the same bet we put on eight months ago is available on the same terms as if there had never been a fire and on the probability that the world is going to be fine,” Ackman said, noting he placed the trade, which is nearly identical to his now-famous hedge, on the day that Pfizer (PFE) and BioNTech (BNTX) released positive trial data on their COVID-19 vaccine.

The Pershing Square manager also said he believes Pfizer’s announcement was “actually bearish for the next few months” because it was likely to prompt Americans to grow complacent about mask-wearing and make them less likely to fear the deadly virus.

When Ackman closed his trade — hailed by The NYT as perhaps “the single best trade of all time” — on March 23, there were just over 10,000 new cases of COVID-19 nationwide. The U.S. saw a record of more than 142,000 new COVID-19 cases on Thursday, a dizzying number that could make a second lockdown inevitable.

While he sees risk in the near term, Ackman remained optimistic about the economy over the long term, saying that it was likely to see a “robust recovery” in 2021.

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