Hedge fund guy with wicked good guess on market!!

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  • #293419

    elias39
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    @elias39

    https://markets.businessinsider.com/news/stocks/bill-ackman-hedge-profits-billions-coronavirus-tanks-stock-market-economy-2020-3-1029035562

    Billionaire investor Bill Ackman turned $27 million into $2.6 billion by betting that the coronavirus would tank the market”

    “Pershing Square used credit protection on investment-grade and high-yield bond indexes to land the massive profits. The assets rise in value as the odds of corporate defaults increase. As measures to combat the virus outbreak cut into economic activity, corporate bond ratings tanked, and investors feared the worst.”

    I understand very little from that paragraph. Something like insider trading?  A little?

     

  • #293463

    retired liberal
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    @retiredliberal

    Yeah, sure.

    We are an arrogant species, believing our fantasy based "facts" are better than the other person's fake facts.

    If you are wrong, it will be because you are not cynical enough.

    Both major political parties are special interest groups enabling each other for power and money, at the expense of the people they no longer properly serve…

  • #293504

    Jim Lane
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    • Total Posts: 243
    @jimlane

    One criterion of insider trading is nonpublic information.  As far as the (brief) article indicates, Ackman took the public information about the progress of COVID-19, dismissed the misleading blather coming from Trump, and made an educated guess that the pandemic would cause corporate bonds to tank.  He was accused of “fearmongering” (probably by some Trump-can-do-no-wrong types).  He ignored the criticisms and took positions in some investment vehicles that would do well if bonds did badly.  He (and people investing in his fund) were handsomely rewarded.

    I think (not sure) that the types of transactions he selected always require a counter-party, i.e., someone to take the opposite side.  If so, Ackman didn’t create $2.7 billion of value.  Every dollar of his profit represents a corresponding loss to someone who, whether from believing Trump or from general complacency, thought that the whole situation was under control, that the problem was minor and would soon go away, and that Trump’s critics were overreacting simply as part of their hoax.

    I guess they thought that, by taking Ackman’s bet, they were really owning the libtards.   😀

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