What Bill Ackman’s $2.6 Billion Big-Short Teaches Us About The Power Of Thinking In Moonshot Bets
Case Study: how Ackman’s mindset has enabled him to find “crisis alpha” and become a Billionaire
By now the $27 million trade Bill Ackman, the CEO of Pershing Square Capital Management, placed earlier this year is well documented within the investment community. The flexibility of mind to short the bond market in February and net $2.6 billion, then pivot and go long the stock market in March to subsequently bag an additional $1 billion, was legendary.
Given the ROI and how quickly it materialized, Ackman’s initial trade is considered by some to be the best trade of all time.
Others refer to it as pure “genius”.
Ackman initiated this trade by making three relatively small bets that in aggregate ended up risking just 0.375% of his hedge fund’s portfolio.
The thought process that led to this asymmetric trade, however, is not one of an investment genius formulating the perfect trade entry.
Rather, it is one that incorporated a simple heuristic that can be used by anyone — particularly during a crisis — to rationalize asymmetric moonshot bets:
“If nothing happened we…
