Bill Ackman turned $27 million into $2.6 billion as the coronavirus ravaged markets. Here are 12 of his most insightful quotes.

bill ackman

Bill Ackman made headlines in March for a passionate 30-minute CNBC interview, but his penchant for remarkable statements isn’t new.

The Pershing Square Capital Management founder is hot off a stellar first quarter, turning a $27 million position into $2.6 billion through credit protection assets in late March. When markets tanked on fresh coronavirus worries and debt ratings deteriorated, Ackman made enough profits to offset losses elsewhere in his portfolio.

The hedge fund manager was among the billionaires warning of outsized economic catastrophe should the US fail to properly combat the pandemic. His dire forecasts in a March 18 CNBC appearance helped push the stock market to intraday lows and drew allegations of fearmongering to boost his credit bets.

Ackman later clarified in a tweet that he believed the White House would properly address the health crisis.

“If that happens, we can win the war against the virus and the markets and the economy will soar,” he wrote.

The billionaire has been quieter lately, but several of the remarks Ackman has made throughout his career still ring true amid volatile markets and the sharp economic downturn.

Here are 12 of Bill Ackman’s most insightful quotes on markets, investing, and business strategy.

Read more: 22 well-known companies are vulnerable to acquisitions by private-equity buyers due to the coronavirus, BTIG says

‘In order to be successful, you have to make sure that being rejected doesn’t bother you at all’

Source: The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Funds

‘Investing is a business where you can look very silly for a long period of time before you are proven right’

Source: BuzzFeed News

‘I’ve seen very few people in the world accomplish anything unless they were optimists’

Source: PBS

‘From day one, I was always unafraid to ask someone to invest because, I thought that, while capital was a commodity, good investment ideas were rare assets’

Source: The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Funds

‘I’m not emotional about investments. Investing is something where you have to be purely rational and not let emotion affect your decision making – just the facts.’

Source: The New York Times Magazine

‘I think most investors overdiversify because they’re lazy. They haven’t done enough research into any of their companies. If they’ve got 200 positions, do you think they know what’s going on at any one of those companies at this moment?’

Source: The Street

‘If I believe that I am right, I will take it to the end of the earth until I am proven right’

Source: The Globe and Mail

‘What the market tells you in the short term is what a certain subset of people believe. That doesn’t mean they’re right.’

Source: PBS

‘Capitalism does not work in an 18-month shutdown; capitalism can work in a 30-day shutdown.’

Source: CNBC

‘Everyone told me it was a really stupid idea to start my own hedge fund right out of business school. That’s how I knew that it was a good idea.’

Source: The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Funds

‘The benefit of short-sellers to the markets is they’re sort of the canary in the coal mine. They are the early warning signal about a problem in the business, a problem in the capital markets.’

Source: PBS

‘Since we believe that short-term market and economic prognostication is largely a fool’s errand, we invest according to a strategy that makes the need to rely on the short-term market or economic assessments largely irrelevant’

Source: Pershing Square Q3 2008 Letter

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Halfway into earnings season, company profits head for their worst fall since 2009

stock market crash

  • With 55% of S&P 500 companies reporting earnings so far, company profits are headed for their worst fall since 2009.
  • For the first quarter of 2020 to May 1, the blended earnings decline for the S&P 500 is 13.7%, according to FactSet.
  • “If -13.7% is the actual decline for the quarter, it would mark the largest year-over-year decline in earnings reported by the index since Q3 2009 (-15.7%),” FactSet said.
  • At a time when company earnings are falling the most since 2009 amid the coronavirus pandemic, the valuation for the S&P 500 is above its five-year and 10-year averages.
  • Visit Business Insider’s homepage for more stories.

Halfway into earnings season, company profits are headed for their worst fall since 2009.

That’s according to data compiled by FactSet and published in a note Friday.

Fifty-five percent of S&P 500 companies have reported earnings to date, and the blended earnings decline is 13.7%. Last week was the busiest week in earnings reports, with four of the world’s largest companies reporting results.

If 13.7% holds as the final blended earnings decline once all S&P 500 companies report earnings, it would mark the largest year-over-year decline in earnings since the third quarter of 2009, where S&P 500 companies reported a blended earnings decline of 15.7%. 

At a time when company earnings are falling the most since 2009 amid the coronavirus pandemic, the valuation for the S&P 500 as measured by the forward price-earnings ratio is 20.3, which is above its five-year average (16.7) and 10-year average (15.0).

Read More: ‘Beware of the oddity’: A Wall Street firm studied every market crash over the last 150 years to reveal how abnormal this one is — and concluded that stocks are doomed for another fall

“This marked the first time the S&P 500 recorded a forward 12-month P/E ratio of 20.0 or higher since April of 2002,” FactSet observed.

The S&P 500’s valuation is elevated even when stocks are more than 10% off their all-time highs because analyst estimates for next year’s earnings are falling.

In fact, during the month of April, there were record-high cuts to S&P 500 per-share earnings estimates for the second quarter of 2020.

The second quarter bottom-up earnings-per-share estimate declined by 28.4% in April to $26.46.

“This marked the largest decline in the quarterly EPS estimate over the first month of a quarter since FactSet began tracking this data in Q1 2002. The previous record was -20.6%, which occurred in the first month of Q1 2009,” FactSet said.

The individual sectors that are reporting year-over-year growth in first quarter earnings include healthcare, consumer staples, and information technology. The sectors leading the decline in earnings for the quarter include consumer discretionary, financials, industrials, materials, and energy.

Companies are altering their capital reinvestment and shareholder return plans to shore up their balance sheets and better prepare for a post-coronavirus world. According to a note published by JPMorgan on Monday morning, 17% of S&P 500 companies have reduced or cut stock buyback activity, 7% have reduced dividend payments, 4% have eliminated dividend payments, and 21% have withdrawn earnings guidance. 

For 2020, FactSet analysts project an earnings decline of 17.8% and a revenue decline of 2.9%. As of Friday, the S&P 500 index was down 12% year-to-date.

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Warren Buffett’s Berkshire Hathaway sold more than $6 billion in stock in April, its first-quarter earnings show

Warren Buffett

  • Warren Buffett’s Berkshire Hathaway netted more than $6 billion from stock sales in April, its first-quarter earnings showed.
  • The billionaire investor’s company was widely expected to deploy a chunk of its $128 billion cash pile last quarter, but instead its reserves grew to $137 billion by the end of March.
  • Berkshire’s first-quarter figures missed Wall Street forecasts due to about $55 billion in investment losses.
  • Visit Business Insider’s homepage for more stories.

Warren Buffett’s Berkshire Hathaway sold more than $6 billion worth of stocks in April, according to first-quarter earnings released on Saturday ahead of its annual meeting.

The famed investor’s conglomerate holds stakes in Apple, Amazon, Coca-Cola, and other companies. It was widely expected to capitalize on the coronavirus sell-off and buy stocks on the cheap, but instead netted about $6.1 billion from stock sales last month.

Berkshire’s cash pile swelled from $128 billion on December 31 to $137 billion at the end of March, despite it spending $1.7 billion on share buybacks in the period.

The group’s first-quarter figures fell short of the consensus estimates of Wall Street analysts polled by Bloomberg.

Read more: ‘Brace for selling’: A Wall Street quant strategist warns that stock-market buying power could evaporate just one week from now — opening the floodgates for a ‘sell in May’ episode

Here are the key numbers:

  • Revenue: $61.3 billion versus the $63.0 billion estimate
  • Net income: $49.7 billion loss versus the $6.33 billion estimate
  • EPS $20.44 loss versus the $2.58 estimate
  • Net asset value: $372 billion versus the $359 billion estimate

Berkshire posted a net loss of $49.7 billion last quarter, a sharp swing from its net earnings of $21.6 billion in the first quarter of 2019. The shift reflected $54.5 billion in investment losses, compared to a $15.5 billion gain in the same period last year.

However, Berkshire warned investors against reading too much into its earnings.

“The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules,” the company said in its earnings release.

Berkshire’s operating earnings grew 6% to $5.9 billion as insurance investment income and “other” earnings rose, offsetting lower insurance underwriting profits due to expected pandemic payouts and less income from its railroad, utilities and energy segment.

The conglomerate had $113 billion invested in equity securities at the end of March, a slight increase from $110 billion at the end of December. It raked in $965 million in after-tax gains from sales of investments last quarter, a sharp increase from $392 million in the comparable period.

Read more: Quant megafund AQR explains why investors should be more worried about prolonged slumps than virus-style crashes — and details a 3-part process for protecting against them

Like many other companies, Berkshire warned that the coronavirus outbreak has “negatively affected” most of its businesses, with the effects ranging from “relatively minor to severe.”

Several of its businesses including railroads, utilities, and insurance have been deemed essential and allowed to continue operating, but their revenues “slowed considerably” in April, Berkshire said. Other companies including retailers and some manufacturing and service groups are being “severely impacted” by closures, it added.

Berkshire added that the coronavirus fallout will likely continue in the current quarter.

“The government and private sector responses to contain its spread began to significantly affect our
operating businesses in March and will likely adversely affect nearly all of our operations in the second quarter, although such effects may vary significantly,” the company said.

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The Death of Cash

Both globally and in the US, the payments ecosystem is evolving. Death of Cash

Two related trends: the slow death of cash and the fast rise of digital payments, are transforming how consumers, businesses, governments, and even criminals move money.

Annual global non-cash transactions are expected to pass the 1 trillion milestone by 2024. This major transformation is being propelled by several factors, including increased usage of digital wallets, more small vendors adapting to accept credit cards, and the explosive growth of mobile commerce.

In The Death of Cash slide deck, Business Insider Intelligence projects what the payments ecosystem will look like through 2024 by examining the driving forces powering digital payment proliferation.

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