Billionaire Hedge Fund Manager Bill Ackman Says World War III ‘Likely Started Already’

EAST HAMPTON, NY - AUGUST 06: Bill Ackman attends the Hamptons International Film Festiva
Photo by Matthew Eisman/Getty Images for Hamptons International Film Festival
John Carney

Billionaire hedge fund manager Bill Ackman said over the weekend that World War III has “likely started already.”

“WWIII has likely started already, but we have been slow to recognize it,” Ackman tweeted on Saturday night.

Ackman is the founder, chief executive, and portfolio manager of Pershing Square Capital Management, one of the biggest activist funds in the world. Ackman made a killing in financial market by betting in February of 2020 that corporate bonds would lose value, paying $27 million for positions in derivatives that he was able to see a few weeks later for $2.6 billion.

As the economy recovered, Ackman took a position in options tied Treasury bonds that would produce gains if interest rates rose significantly. As inflation rose last year, pushing the Federal Reserve into a more hawkish stance and eventually forcing the Fed to signal that it would raise rates, the value of those options soared.

The value of shares in Pershing Square Holdings, Ackman’s publicly traded fund, is up 75 percent since January of 2020 and the company now has a market cap of $6.6 billion. Ackman’s total assets under management are said to have risen from less than $7 billion at the start of the pandemic to around $20 billion.

Ackman’s argument that a broader conflict with Russia is inevitable and perhaps already begun echoes the claims made by Ukrainian officials.

“Because Russia is a nuclear power and Putin is a madman, we say we can’t intervene in the Ukraine. What then do we do when he wants more?” Ackman said in another tweet.

Ackman also said that by refusing to impose a no-fly zone in Ukraine while vowing to defend NATO members, the Biden administration is endangering non-NATO countries such as Ireland, Switzerland, and Sweden. He also compared what Putin is doing in Ukraine to the Holocaust.

 

 

Ackman has famously stumbled a number of times. He was bullish on drugmaker Valeant before shares of that company crashed. He publicly declared Herbalife Nutrition a fraud and shorted the shares, a trade that reportedly lost around $1 billion as regulators and investors rejected his claims.

He predicted shares of Fannie Mae and Freddie Mac could be worth as much as $47 a share at a time when they were priced in the market at $2.50 or so, joining a number of other hedge fund managers who predicted the government would not be able to keep hold of their profits and keep them in conservatorship. That trade failed when lawsuits brought by fund managers against the U.S. government met with near-universal rejection by the courts.

He amassed a huge stake in retailer JC Penny and publicly predicted a huge upside from changes in management and the way the store-operated, only to have his hand-picked CEO fail miserably and his stake lose $700 million in value.

Ackman began his Twitter thread like many self-styled investment guru newsletter pitches begin: by touting his prescience about the most recent crisis to provide authority for his prediction of the next crisis.

“In January 2020, I had nightmares about the potential for a pandemic, but everyone seemed to think I was crazy. I am having similar nightmares now,” Ackman tweeted, ignoring his own mixed history of predictions and the investing mantra that “past performance may not be indicative of future results.”

Joe Weisenthal, of Bloomberg News, once sang about this kind of pitch in a song he performed at a variety show built around his Odd Lots podcast.

 

(Full disclosure: Ackman once referred to my work at the Wall Street Journal‘s “Heard On The Street” column as the “most factually inaccurate” and “frankly embarrassing” because I had said that hedge fund bets on Fannie Mae and Freddie Mac were unlikely to succeed. He called my work a “disaster” at a time when shares of the mortgage giants were trading around $2.50 and he was predicting they would rise to ten or nearly 20 times as much. Shares of each of the companies currently trade at 78 cents.)

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