A trader took a trade and that trade made a profit of 18000 cr. This is the name of the trader bill Ackman who made a profit of 18000 cr in a trade in the month of March 2020. This profit is as much as the net worth of Rakesh Jhunjhunwala, who is one of the most successful investors in India.
Profitable Trade in the Market Fall:
In the early months of 2020, the decline in the stock market started. Stock indices of all the countries showed a big decline. And in the meantime, bill Ackman made the biggest profit in a trade that was 18,000 Cr.
How Bill Ackman made a profit in Falling Market:
Who is Bill Ackman?
Bill Ackman is an American investor and hedge funds manager. He started a hedge fund called Pershing Square Capital Management. At that time initially managing funds of 3000 cr. His fund house started giving good returns to the investors in 2004.
Because of this, a lot of high net worth investors started investing in Pershing Square. Because of this, he started managing more funds. Today in 2021 Bill Ackman manages the funds of “$11 Billion”.
These hedge funds have given very good returns. As they have given annual returns of 17 percent from the beginning till now. which is good enough.
The Biggest Profitable trade in the world, By Bill Ackman in 2020:
In March 2020, cases of corona started appearing all over the world and its infection started increasing. Due to this infection, many countries declared lockdown. Due to this, there was a sudden stop in many sectors and that sector came to a halt.
The lockdown declared in many countries, due to this Bill Ackman felt that there may be a lockdown in the USA and its negative effect can come on the companies.
As the companies were declining due to the lockdown in other countries, “bill Ackman thought that sell their all positions and have to convert them into cash, which means if the market will crash I will not get loss in positions.”
Change in Plan and Trade with CDS:
Bill Ackman later changed the plan. Bill Ackman made a press release and in that press release, he told that Pershing Square had purchased $27 million worth of Credit Default Swaps (CDS) against US corporate bonds.
CDS works like insurance. Bill Ackman felt that his stocks might decline due to the pandemic, so he bought CDS, meaning he bought insurance in a way.
Because of this insurance, Bill Ackman will profit when the corporate bonds default and the prices go downside. And so it happened, due to the coronavirus pandemic and lockdown, stocks started falling, bonds started defaulting and downfall started in the stock market. Due to this big downfall, Bill Ackman made a huge profit.
Due to the decline in many stocks and bonds, Bill Ackman made huge profits. Bill Ackman was bought CDS for $27 million and made a profit of $2.6 Billion. This trade of Bill Ackman is considered to be the biggest trade ever in the world.
After this big profit, he invested in good companies out of that profit. In the month of March, there was a sharp fall in the stock prices of many companies. At that time Bill Ackman invested in stocks like Berkshire Hathaway, Starbucks.
That was the story behind the biggest profitable trade in the world in March 2020.