Key Words: Billionaire Bill Ackman is hedging his bets as coronavirus looms over market

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‘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.’

That’s Wall Street billionaire Bill Ackman explaining in a statement released this week why he has taken measures to protect his hedge fund’s $6.6 billion portfolio after a rough start to the year.

The Pershing Square boss is basically safeguarding his holdings, which include restaurant and hotel stocks, against the impact of the coronavirus as it continues to threaten equity and credit markets in the U.S. and abroad.

Starting last week, “we have taken steps to protect the portfolio from downward market volatility,” he wrote. Ackman, who rarely gives the public a glimpse into the inner workings of the fund, offered no details on the specific steps.

He explained that he would rather hedge than unload positions in stocks like Chipotle CMG, +1.23%  , Hilton HLT, -0.83%  , Lowe’s LOW, +2.05% Restaurant Brands QSR, -0.39% and Berkshire Hathaway BRK.A, +0.93% — all of which he considers strong businesses otherwise.

“These hedges will likely mitigate portfolio losses in severe market declines, while also somewhat reduce the portfolio’s upside potential if there is minimal economic or market impact from the virus,” Ackman wrote.

Pershing Square had a big year in 2019, rallying 58.1% to out pace the broader bull market. It’s been a different story this year, with the portfolio dropping 7.1% so far. At the end of December, Ackman was managing some $7.5 billion in assets. That number, Reuters reported, has dropped by almost a billion dollars since.

As far as hedging, there wasn’t much need for it in Wednesday’s session, with the Dow DJIA, +1.92% up more than 600 points. The S&P SPX, +1.55% and Nasdaq COMP, +1.43% were also solidly higher.

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