Bill Ackman Achieved 10,000% Return by "Shorting" S&P 500 At Its Feb Peak, Now He Wants to Do it Again

[GlobeCitizen]

He "shorted" S&P500 in Feb when the index was at peak, and "covered" his bet when the index was at the bottom in March. Now he wants to repeat his briliant bet by shorting the index again, started the day when the market was pushed significantly higher due to positive vaccine news. I agree with him but I don't think the market would act like last time. Instead, I think the market would act like a downtrend roller coaster, meaning any up days would be followed by down days in a bit more intensity.

In the meantime, my bet on NWBO started to pay off, currently up about 500% based on today's price of about $1.25, hopefully it would be up more than 10,000% when top line data is announced.

Bill Ackman's 'single best trade of all time' turned $27 million into $2.6 billion — now he's trying it again

The billionaire investor talked about his latest wager on what he believes will be a rough stretch for American corporations due to the economic hit from the...

www.marketwatch.com

 

[GlobeCitizen]

Note he didn't literally short the index, instead he bought hedge (insurance) to protect his portfolio consisted of mostly a dozen of large caps. For instance, he spent $27 million buying all the portfolio protection they could find. In this case, they settled on credit markets. With spreads that are a gauge of riskiness and fear at record lows, Pershing Square bought far out of the money protection against investment-grade and high-yield bond indexes.

 

[GlobeCitizen]

yes, approximately 100 fold (I corrected the typo thanks). he bought far out of the money protection against investment-grade and high-yield bond indexes. If he spent that kind of money bought VIX he would have been up 1000 fold. I know somebody did that in a very small amount of bet. All these big hedge funds buy hedge all the time, but nobody betting such a huge sum of money as far as I know.

 

[cucapila]

27million 变成 2.6 billion, 收益是约96倍，不是本楼标题所说的1000倍。不管是96倍， 还是1000倍，在这么短的时间内都是极其难以实现的。不知他具体是如果操作的？

你少看了个百分号

具体操作就是杠杆期股，做空这个股票，爆了一分不剩。大概10年前有人写个文章叫我是怎么在一个月内把1万变成1百万的

 

[cucapila]

楼主看了我的贴后，更正了标题。现在标题对了。

一万倍两个月基本不可能，那属于中彩票的几率了
27米变2.6B，只能说人家有钱，不在乎亏

 

[多伦多carpool]

出于好奇，用目前的市场数据算了一下，算出了如果他现在这样做可用的操作方法。刚才把操作方案写了出来，怕有人真去模仿，又删了。这样做血本无归的风险太大了。一般人还是不要碰这种比赌博赢的概率还要小得多的游戏。

他买的是cds，credit default spread，只对机构开放，散户想买也买不了。散户最多买out of money option，大把赌徒喜欢玩这种刺激游戏。

 

[多伦多carpool]

这种文章呢，没人告诉你细节的。其实他自己本身就有几十亿美金的仓位，不舍得跑路，但是当时短期是太stressfull，只能买点hedge对冲一下。当时的几十亿美金估计按market value也跌了这么多。当然后来他正股没割，cds套利，所以大赚一笔。

 

[多伦多carpool]

27million 变成 2.6 billion, 收益是约96倍，不是本楼标题所说的1000倍。不管是96倍， 还是1000倍，在这么短的时间内都是极其难以实现的。不知他具体是如果操作的？

今年是股票大年，很多散户都翻了好几倍。不少个股涨10-30倍。胆子大的上点option，100倍是可能的。但1000倍是夸张了点。
tsla 400-2500，nio 1.2-44

 

[GlobeCitizen]

Yes, 多伦多carpoo is right. Bill Ackman bought derivatives cds as a hedge to protect his large portfolio of mostly large caps. Retails can buy cds as well but mostly and practically unworthy and unpractical for a variety of reasons. As a result, it is indeed a big league's game not for retails who manage small portfolioes, perhaps from a few tens of thousand to a few tens of million in value. My understanding is he bought cdc just like an insurance. He had to pay tens of thousands of insurance premium for his insurance contracts if the underlining assesses were healthy, not default as thought at the market peak in Feb. In march, some of the assesses concerned went under, some bankrupted, hence his windfall from his bet. During the contract term, you can trade the contract, just kind of like an option. You don't need to wait until it expires.

For retails, we really don't have something big to protect. In other words, it's not worthy of spending a significant amount of money to protect our portfolio. Second, if we trade in our registered retirement accounts and/or tax free saving accounts, there will be no tax issue to consider unlike the big boys, like Bill; and lastly, I would personally prefer cash out if I think the market is going to crash.

If retails really want to take advantage of next downturn if you think one is coming, besides having dry power ready to buy at the future bottom, they may use leveraged short/inverse etfs to their advantage. As a matter of fact, to my acknowledge, this is how retails usually play in the and around event of sudden turns.

BTW, since most of these derivatives such as cds are traded OTC. It does add more risks then trade in major exchanges. Retail investors really don't have the resources to dig deep into these underlining assesses. So it's possible though maybe extreme, even you bet right, the underlining assets go bankrupt, you may get nothing except big fat paper profit because no where you can find those guys responsible. Lawsuits in most part is not for small potatoes like retails.

Bill doesn't have consistent record, he had under performed most of the last decade, but it seems he does have his luck beginning last year and this year.

 

[GlobeCitizen]

You seems to be a sophisticated investor who knew what he was doing. For a sizable portfolio, yes it may be worthy of using a combined option strategy to protect his/her portfolio, and it's also dependent on investors own situations. No one size fits all. Yes, no investors should plan to hold efts. GL.