Billionaire hedge fund manager Bill Ackman has had some explaining to do this week.
After going on CNBC to give a sky-is-falling warning on Mar. 18, Forbes caught on to what was up. Ackman was talking his books for hedge fund Pershing Square Capital Management, with $8 billion assets under management.
In February Ackman’s hedge fund had bought $27 million in bets against the market that were worth $2.75 billion by March 12.
That’s why coverage of this story by Business Insider, The Guardian and CNBC range from irresponsibly misleading to blatantly false.
CNBC’s Thomas Franck reported:
Bill Ackman warned ‘hell is coming’ because of virus: He then pocketed $2B in bets against markets
That is very misleading. As Ackman explained in a Thursday letter to Pershing Square investors, he bought the hedges in February.
The S&P 500 peaked on Feb. 19 and had already crashed calamitously by the time of Ackman’s Mar. 18 CNBC interview. So he did pocket $2.75 billion after warning hell is coming, but most of it came from before the warning. So Franck and/or his editors’ article makes a sensational, misleading insinuation.
The Guardian’s much looser headline on the Ackman story is blatantly false:
‘Hell is coming’: how Bill Ackman’s TV interview tanked the markets and made him $2.6bn
His interview quite certainly and unequivocally did not make him $2.6 billion. In the first place, he bought the credit default swaps that went from $27 million to $2.75 billion weeks before the interview.
And secondly they didn’t make him all that money. They made it for investors with his hedge fund. Of course he got a piece of the pie.
But with those important, context-setting, less sensational, but more accurate qualifications made– what Bill Ackman did was still shady as hell.
His emotionally-charged, nearly hysterical doom and gloom interview on CNBC may have helped push markets lower through Mar 23. That drove his bets home and squeezed some more profit out of Pershing’s trade.
The market bounced after Monday, March 23 for an impressive rally this week. That was when Ackman made his exit and sold off the credit default swaps to bag massive profits and plow some into the stock market’s bargain bin equities.
But his interview could have incited a panic that continued to send markets spiraling downward. He didn’t make Pershing billions from that interview, but he could have. And that seemed to be his goal.
During the interview Ackman called on President Trump to shut down the entire country for a month. He also tweeted the suggestion that same day. He said if Trump does that, “the stock market will soar, and the clouds will lift.”
This Wall Street billionaire called for 300 million people’s lives and jobs to be frozen for a month. Did he really think that was the best solution for America? Or was he saying it because it would have made him a fortune? It’s hard to believe Ackman was looking out for anyone but himself and his wealthy clients.
He was angling to demolish the American economy to make himself even richer. This is the kind of behavior that makes people despise financiers. And the SEC should breathe down his neck over this one for a while. If they find any T’s not crossed, any I’s not dotted, he should be fined mercilessly.
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Last modified: June 24, 2020 1:03 AM UTC