Ackman hedges to protect against coronavirus' 'negative' impact

This post was originally published on this site

By Svea Herbst-Bayliss

BOSTON (Reuters) – Billionaire hedge fund investor William Ackman on Tuesday said he has moved to protect the firm’s $6.6 billion portfolio, which includes restaurant chain and hotel stocks, as the spread of the coronavirus has sparked prolonged panic selling in markets.

Ackman said he expects the outbreak, which has been detected in roughly 80 countries, to weigh on growth in the United States and abroad and affect both stock and credit markets.

Over the last 10 days, “we have taken steps to protect the portfolio from downward market volatility,” wrote Ackman, who oversees Pershing Square (NYSE:) Capital Management. He declined to say exactly what steps he took.

Ackman spoke out on the same day that the Federal Reserve announced an emergency interest rate cut. Ackman’s statement, an unusual move for someone who seldom discusses portfolio movements publicly, underscores investors’ fears that the coronavirus will have serious implications for economic growth.

“We believe that efforts to contain the coronavirus are likely to have a substantial negative impact on the U.S. and global economies, and on equity and credit markets,” the statement said.

Ackman said hedging was preferable to selling off his portfolio of companies whose businesses are otherwise strong and include Chipotle Mexican Grill (N:), Hilton Worldwide (N:), home improvement chain Lowe’s (N:), Burger King operator Restaurant Brands International (TO:) and Berkshire Hathaway (N:), among others. The hedge fund sold out of its position in Starbucks (O:) earlier in the year.

In the first two months of the year, the firm’s Pershing Square Holdings portfolio fell 7.1%, after having gained 58.1% last year, which made it one of the industry’s best-performing hedge funds. The market drop has taken a bite out of the size of Ackman’s funds, according to a report which put assets under management at $6.6 billion at the end of February compared with $7.5 billion at the end of December.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Add Comment