Billionaire Bill Ackman explains how he pulled off a deal described as 'the single best trade of all time'

• In an op-ed article for The New York Times, the former investment banker William Cohan said Bill Ackman's bet on the coronavirus tanking the stock market "may be the single best trade of all time."
• Ackman, the billionaire hedge-fund investor, turned a relatively modest $27 million position into a prize-winning $2.6 billion in March when the market tanked as the virus spread.
• Ackman explained his thoughts behind the hedge in an episode of the "Knowledge Project" podcast.
• Visit Business Insider's homepage for more stories.

In a New York Times op-ed article published Wednesday, the former investment banker William Cohan said Bill Ackman's hedging decision "may be the single best trade of all time" and lauded his correct bet that until the Federal Reserve and Congress acted, the markets would tank.

Ackman, the billionaire hedge-fund manager, had an intuition that the coronavirus-driven market meltdown would have a greater impact than investors expected. That led him to mint a multibillion-dollar profit in March, turning a $27 million position into a $2.6 billion windfall through defensive hedge bets as the coronavirus outbreak threatened a deep economic recession.

Ackman's bet that the debt bubble would burst was based on a hunch that investors would cast aside riskier securities in bond indexes as the coronavirus spread across the world.

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In the latest episode of the "Knowledge Project" podcast, Ackman explained his thinking behind the hedge.

"We've got this massive position in a hedge, which maybe has the potential to double if credit spreads widen to where they were during the financial crisis," he said. "But if they don't and the government takes the right steps, this hedge could be worth zero, and the stock market could go right back up to where it was. So we made the decision to exit the hedge."

Ackman also said he started buying stocks with a tidy profit and invested more than $3 billion in risk assets.

Earlier in March, Ackman wrote in a letter to investors that he thought the US "can be reopened carefully as China has so far successfully done" after enforced lockdowns.

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