Billionaire Bill Ackman plowed more than $200 million into Warren Buffett's Berkshire Hathaway after the coronavirus sell-off
- Bill Ackman snapped up more than $200 million in Berkshire Hathaway stock after the brutal market sell-off that took major indexes roughly 35% below recent highs.
- The billionaire's Pershing Square hedge fund boosted its stake in Warren Buffett's conglomerate by 39% using some of the $2.6 billion windfall from its coronavirus hedges.
- "Berkshire Hathaway was built by Warren Buffett to withstand a global economic shock like this one," Ackman said in the fund's 2019 annual report.
- "We believe that Berkshire will emerge from this crisis as a more valuable enterprise," he added.
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Billionaire investor Bill Ackman bought more than $200 million worth of Berkshire Hathaway stock after the novel coronavirus ravaged stock markets, signaling his confidence in Warren Buffett's conglomerate.
"Berkshire Hathaway was built by Warren Buffett to withstand a global economic shock like this one," Ackman said in Pershing Square's 2019 annual report, published this week.
The hedge fund boosted its stake in Berkshire by 39% last month using some of the $2.6 billion windfall from its coronavirus hedges, Ackman said in the report. It also added to its investments in Hilton, Lowe's, and Burger King-parent Restaurant Brands, and bought back into Starbucks.
Based on the 39% increase, Pershing added roughly 1.26 million Berkshire shares to the 3.24 million it held at the end of December, lifting its total holding to around 4.5 million shares. Those shares are worth about $835 million based on Berkshire's Class B stock price at the time of writing.
Pershing probably paid between $210 million and $255 million for the shares, based on Berkshire's trading range over the past month. Berkshire now accounts for about 13% of its $5.7 billion portfolio, up from 11% when Ackman revealed the stake last August.
Berkshire will emerge stronger
Ackman doubled down on Berkshire because of its $128 billion cash pile, the fact that its insurers will likely dodge coronavirus payouts as pandemics tend to be excluded from policies, and its bias towards proven, resilient businesses such as railroads, industrials, and utilities.
"In light of Berkshire's extraordinarily strong financial position and the nature of the portfolio companies it owns, we believe that Berkshire will not be materially negatively impacted as a result of the crisis," Ackman said in the report.
"Rather, we believe that Berkshire will emerge from this crisis as a more valuable enterprise," he continued.
"The market decline will enable it to invest a substantial portion of its cash in investments which will accelerate its long-term growth in intrinsic value."
Ackman is a longtime admirer of Buffett. He told investors last year - when Pershing first invested in Berkshire - that Buffett was not only a "great investor" but arguably "the world's greatest insurance company architect and CEO."
