Bill Ackman in talks to launch fund in bid to pounce on investor complacency
Bill Ackman is reportedly in talks to launch a new fund in an attempt to copy the success of doomsday trades the investor made during the covid pandemic.
The billionaire hedge fund manager’s investment company Pershing Square would use the fund to make “asymmetric” trades aimed at profiting by betting against the leading market narratives, according to people familiar with the matter.
The strategy would mirror that of wagers made during the pandemic when Ackman paid $27m for derivatives that appreciated upon companies crashing and being forced to pay off their debt, according to the Financial Times.
The strategy gave Pershing a $2.6bn windfall after economic disruptions caused by pandemic volatility sent bond markets into freefall.
Using a fresh fund
Rather than exclusively use Pershing Square’s main fund, an London-listed public vehicle with roughly $20bn in assets, Ackman was in discussions to create a new fund, according to three people briefed on the matter.
The use of a potential new fund comes after widespread market volatility during the first quarter of the financial year, leading the fund to lose 16 per cent of its value at the end of March, according to filings.
His new fund also comes as he prepares to take his hedge fund company public, knowing he must show potential investors fresh avenues for growth.
In private discussion with potential investors, Ackman highlighted the fund as a potential way to amplify the firm’s fee earnings, according to people briefed on the meetings.
In the prospectus for the public listing last month, the company said it “may choose to complement our organic growth by selectively launching new permanent capital funds and other vehicles that leverage our brand and core competencies” to boost capital.
Broadening horizons
Away from the new fund, Ackman has also been eyeing other avenues to fulfil his idea of a broader conglomerate ahead of a public listing.
He built a large stake in property developer Howard Hughes Holdings, which is being used as a vehicle to create an enterprise that he has pitched as a modern-day Berkshire Hathaway.
Earlier this week, Ackman also offered to buy Universal Music group in a deal that values the well-known label at around £47.9bn, with the transaction involving shifting the music group to a blank-cheque company owned by Ackman.