For those who didn’t hear, at the beginning of this year Billionaire Bill Ackman placed a trade that was deemed “one of the best trades of all-time.” In this trade, he turned a $27 million bet into a whopping $2.6 billion.
Let’s be clear, the serious profit didn’t come after 10 years, 5 years, or even 2 months of holding. In three weeks, Ackman turned a $27 million premium paid to buy credit default swaps into a profit of $2.6 billion and he still wasn’t finished. He took the next step and reinvested some of his profits in the long positions he wanted to protect in the first place. After the market’s insane run, he was able to net another $1 billion for him and his investors.
The Pershing Square Manager had this to say about their recent position “We’re 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.”
It will be interesting to see if Bill Ackman will make history once again. On another note, if he is right, the effects to the stock market and livelihoods of many people have the potential of being severely affected. Stay Safe!
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.