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Shalini Nagarajan
Updated
2020-12-26T10:19:16Z
Shalini Nagarajan
- The hedge fund billionaire Bill Ackman is among few who minted a multibillion-dollar profit during the throes of the coronavirus pandemic.
- The famed investor turned a relatively modest $27 million bet into a whopping $2.6 billion windfall as the outbreak continued to drag on stocks and threatened deep economic recession.
- From George Soros' breaking of the Bank of England in 1992, to Michael Burry's now world-famous Big Short during the financial crisis, Markets Insider decided to round up some of the best trades of all time.
- Visit Business Insider's homepage for more stories.
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Pershing Square Capital's CEO Bill Ackman made headlines after making $2.6 billion for his hedge fund off a wise, yet controversial bet that the coronavirus would crash the stock market.
With stock markets going into free-fall during the economic downturn, Ackman was one among a handful who landed massive profits by using credit protection on investment-grade and high-yield bond indexes.
Ackman's was the latest in a long line of renowned risky but wildly successful bets on the markets.
From George Soros' breaking of the Bank of England in 1992, to Michael Burry's now world-famous Big Short during the financial crisis, Markets Insider decided to round up some of the best trades of all time.
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Check them out below.
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Bill Ackman turned $27 million into $2.6 billion during the coronavirus pandemic
Ackman, the billionaire hedge-fund manager, had an intuition that the coronavirus-driven market meltdown would have a greater impact than investors expected.
That led him tomint a multibillion-dollar profit in March 2020, turning a $27 million position into a $2.6 billion windfallthrough defensive hedge bets as the coronavirus outbreak threatened a deep economic recession.
Ackman's bet that the debt bubble would burst was based on a hunch that investors would cast aside riskier securities in bond indexes as the coronavirus spread across the world.
The trade was so good that one columnist said it "may be the single best trade of all time."
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Michael Burry's 'Big Short'
Possibly the most iconic trading victory of all time, Michael Burry's fund Scion Capital built up huge short positions against the US sub-prime mortgage market starting in 2004.
When the market collapsed during the financial crisis in 2007 and 2008, Burry netted a $100 million profit for himself, and $725 million for other investors.
His successes became the subject of Michael Lewis' seminal book about the crisis "The Big Short," and then a film of the same name.
Source: Vanity Fair
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David Tepper's $7 billion win during the depths of the financial crisis
In 2009, American billionaire David Tepper bought large quantities of distressed bank assets.
The huge investments he made in Bank of America and other burdened companies netted his hedge fund an enormous $7 billion.
Source: Wall Street Journal
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'Evil Knievil' Simon ca*wkwell's ingenious shorts against Northern Rock
In 2007, British spread-better Simon ca*wkwell predicted the demise of the bank Northern Rock and made a neat profit of over £1 million ($1.2 million) by short-selling its shares.
Source: Financial Times
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Kyle Bass' $4 billion win on the US housing market collapse
In 2007, famed investor Kyle Bass and his hedge fund made a $4 billion profit by buying credit default swaps after the housing market crashed due to the ongoing US recession.
Source: D Magazine
Read more: A real-estate investor who generates $342,000 of annual cash flow shares his unique spin on a popular investment strategy that's helped land him 114 units
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Andrew Hall's $100 million profit on $100 oil futures
In 2003, oil trader Andrew Hall bought cheap long-dated oil futures that would pay off if the price reached $100 at some point over the next 5 years.
By 2008, oil reached $100 and Hall acquired $100 million for his employer Phibro, and a mammoth paycheck for himself.
Source: Time
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Neil Woodford's unconventional bets in tobacco stocks
In 2000, British fund manager Neil Woodford invested generously in tobacco stocks which were being shunned before the dotcom bubble burst.
By 2014, his flagship equity fund received annual returns of more than 20% from British American Tobacco (BAT).
Source: Financial Times
Read more:
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George Soros: 'The Man who Broke the Bank of England'
In 1992, billionaire philanthropist George Soros and his hedge fund made a profit of over $1 billion by bringing the Bank of England to its knees after betting that the price of the Pound Sterling would drop.
Source: Forbes
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Louis Bacon's 86% return through betting on oil prices
In 1990, American investor Louis Bacon chose to invest in oil after correctly predicting that the Iraq War would impact the commodity's prices.
He ended up with an 86% return on that bet.
Source: Money Week
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Stanley Druckenmiller's double bets on the Deutsche mark
Between 1988 and 2000, American investor Stanley Drunckenmiller made millions by making two long bets in the German currency, Deutsche Marks, while working as a trader under George Soros' hedge fund Quantum.
Source: Trading Education
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Andrew Krieger at odds with the Kiwi dollar
In 1987, currency trader Andrew Krieger took up a short position worth hundreds of millions of dollars against the New Zealand dollar. His sell positions exceeded the entire money supply of New Zealand and ultimately led to him netting $300 million for his employer Bankers Trust.
Source: Traders DNA
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Paul Tudor Jones' $100 million profit on Black Monday
In 1987, famed hedge fund manager Paul Tudor Jones predicted the 'Black Monday' crash. By shorting the stock market, he ended up with 200% returns for investors besides a $100 million paycheck for himself, an almost unheard of sum at the time.
Source: New York Times
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