March 27, 2020 / 2:20 PM / 2 months ago

Ackman says TV interview did not lead to profit on trades

FILE PHOTO: William 'Bill' Ackman, CEO and Portfolio Manager of Pershing Square Capital Management, speaks during the Sohn Investment Conference in New York City, U.S., May 8, 2017. REUTERS/Brendan McDermid/File Photo

BOSTON (Reuters) - Billionaire investor William Ackman said a CNBC television interview he gave last week was not designed to profit from any trades, dismissing some media speculation he had purposely pushed markets lower to make money off his hedges.

“Our hedge had already paid off prior to my going on CNBC,” Ackman, wrote to his Pershing Square Capital Management investors late Thursday. “The idea that my appearance pushed the market down an additional 4% that day is absurd.”

Ackman told CNBC on March 18 that he thought the best approach to killing off the coronavirus was to close the borders and shut down the entire country, barring essential services, for 30 days. “Hell is coming, shut it down now,” he told CNBC.

The S&P 500 was off 6.5% when he began speaking and fell more and the Dow Industrial Average, already off 1,000 points when he began, hit a circuit breaker as he spoke and reopened down 2,000 points.

In Thursday’s letter, Ackman said “some press reports had raised questions about his appearance” and questioned whether he “intended to drive down the market so that we could profit on hedges we had previously entered into.”

Last week investors said the interview unnerved already jittery shareholders. “Please get Ackman off CNBC before people start jumping off bridges,” prominent investor Mike Novogratz tweeted during the interview.

Ackman said in the letter that he had sold more than half the hedge before the show and sold the balance over the next three trading days. “The hedge did not increase in value during or after I went on CNBC,” the letter said.

Pershing Square earned roughly $2.6 billion by hedging its stock portfolio through credit protection on investment grade and high yield credit indices. Much of the money has been reinvested in stocks the firm already owns.

For two years, Ackman had stayed largely out of the public eye to resuscitate his loss-battered portfolio which rebounded with a record 58% gain in 2019. He returned last Wednesday with an early morning tweet and the CNBC interview and has followed up with more interviews to explain his thinking.

Reporting by Svea Herbst-Bayliss; Editing by David Gregorio

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