Billionaire Bill Ackman explained how he pulled off a deal described as 'the single best trade of all time'

• In an op-ed for the New York Times, former investment banker William Cohan described Bill Ackman's bet on the coronavirus tanking the stock market as 'the single best trade of all time.'
• Billionaire hedge-fund investor Bill Ackman turned his relatively modest $27 million hedge fund position into a prize-winning $2.6 billion in March by watching the market tank as the virus spread.
• Ackman explained his thoughts behind creating the hedge fund in an episode of the Knowledge Project podcast.
• Visit Business Insider's homepage for more stories.

In a New York Times op-ed, former investment banker William Cohan lauded Ackman's hedging decision as 'the single best of all time' and for correctly betting that until the Fed and Congress acted, the markets would tank.

Billionaire hedge fund manager Bill Ackman had an intuition that the coronavirus-stricken market meltdown would have a greater impact than investors expected.

That led him to mint a multi-billion dollar profit by turning a $27 million position into a $2.6 billion windfall through 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 pandemic spread across the world.

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In the latest episode of the Knowledge Project podcast, Ackman explained his thinking behind creating the hedge fund:

"We've got this massive position … which maybe has the potential to double if credit spreads widen to where they were during the financial crisis," he said on the show. "But if they don't, and the government takes the right steps, this hedge could be worth zero, and the stock market could go right back up to where it was. So we made the decision to exit."

Ackman also explained that he started buying stocks with a tidy profit and invested more than $3 billion in risk assets.

Earlier in March, Ackman wrote in a letter to investors that he believed the US "can be reopened carefully as China has so far successfully done" upon completion of an enforced lockdown.

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