Bill Ackman says he’s ‘long-term bullish on America’ and the stock market, but sees a short opportunity in junk bonds

  • Bill Ackman said in an interview with CNBC on Wednesday that he is still “long-term bullish on America” and the stock market even as COVID-19 cases continue to surge throughout the country.
  • Ackman said he continues to own stock in Hilton, Starbucks, Lowes, and Restaurant Brands, among other names, and is “effectively 100% long.”
  • However, Ackman said he is cautious on markets in the near term and is short the high-yield index, as he doesn’t think the Federal Reserve is going to bail out companies with too much debt.
  • Visit Business Insider’s homepage for more stories.

Billionaire Bill Ackman is “long-term bullish on America,” and “long-term bullish on the markets,” even as COVID-19 cases surge across the country, according to an interview with CNBC on Wednesday.

Ackman said he continues to own stocks in industries that are poised to bounce back strong if a COVID-19 vaccine is developed and the economy quickly reopens, like hotel operators and restaurants. Specifically, Ackman said he owns Hilton, Starbucks, Lowe’s, and Restaurant Brands, among others.

“If there’s a vaccine soon, which I hope there is, markets could snap back quickly,” Ackman said.

Still, despite Ackman’s bullish long-term view, he is cautious on markets in the near term, saying that it’s going to take time for the economy to reopen.

“My expectation is things don’t get meaningfully better until the second half of 2021,” Ackman said. Ackman’s Pershing Square is “effectively 100% long,” but does have a short position in the high-yield index, saying that it serves as a good hedge if there’s further market weakness.

Read More: Morgan Stanley warns tech stocks are unusually vulnerable to earnings disasters over the next few weeks — and shares its strategy for profiting regardless of the outcomes

Ackman is bearish on highly leveraged companies because he doesn’t think the Fed will bail out companies with too much debt, according to the interview. “I think lending money to highly levered companies only ends in tears,” said Ackman. 

Ackman added that bankruptcy isn’t always bad for companies, explaining that a bankrupt company doesn’t have to fire all of its employees, and often comes out of bankruptcy as a less levered company in a better position to compete.

One way the economy and stock market could bounce back quicker, according to Ackman? If everyone started to wear a mask in public spaces. 

“The sooner everyone in America wears a mask when they’re in a public space, the more quickly the economy will bounce back. The economy’s going to recover, the market’s going to go higher,” Ackman said.

And while Ackman is bullish on stocks, he missed out on the massive run made by large-cap tech companies like Amazon and Tesla.

Ackman said he likes to invest in businesses where you don’t have to be a visionary to project their cash flows a decade out to justify their current valuations, explaining why he isn’t invested in a high-flying name like Tesla.

Despite not being invested in Tesla, Ackman is a fan of the car.

“I actually bought a Tesla, it’s a great car. I have some issues with it and will send a note to Elon on how it can be better,” said Ackman.

Read More: JPMORGAN: The most unloved group of stocks at the coronavirus crisis peak is now more appealing than ever before. Here are 3 trades to buy into while they’re still super-cheap.

Source: Read Full Article