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Nov. 29, 2021, 10:02 a.m. EST

Hedge-fund investor who made $2.6 billion on pandemic trades says omicron could be bullish for stock market

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By Mark DeCambre

Hedge-fund luminary Bill Ackman over the weekend said the new omicron variant of the coronavirus that causes COVID-19 could be bullish for stocks if it proves to result in mild to moderate symptoms for those who contract it.

The discovery of the variant resulted in one of the worst Black Friday trading sessions in recent memory, with the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.65% , the S&P 500 index /zigman2/quotes/210599714/realtime SPX +2.43% and the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +3.13% all tumbling by at least 2%, but Ackman’s comments suggest that investors’ knee-jerk response may have been an overreaction.

Bond yields on Friday also fell as prices for government debt saw a rush to the perceived safety of Treasurys on the back of fresh concerns about new restrictions that could result from a strain of COVID that the World Health Organization on Friday designated a variant of concern.

However, stocks were bouncing back on Monday and the 10-year Treasury note yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -1.81% was up 8 basis points at 1.56%. Prices for Treasurys fall as yields rise.

Ackman, who runs Pershing Square Capital, is known for his lucrative COVID wager. The Financial Times reported back in 2020 that the investor cashed out on bet that netted him a $2.6 billion profit on a $27 million at risk, on the premise that insurance premiums would soar during the height of the 2020 COVID pandemic as economies locked down.

He also later in 2020 said that he placed bearish bets on corporate credit on the day that Pfizer /zigman2/quotes/202877789/composite PFE +1.80%  and BioNTech /zigman2/quotes/214419716/composite BNTX +4.97% released positive trial data on their COVID-19 vaccine, which triggered a whipsaw rally in stocks.

Ackman was wagering that the vaccines would lead to mask-wearing complacency. However, that bet presumably turned out wrong as markets continued to surge in the aftermath of those vaccines.

The danger posed by the omicron variant isn’t yet fully understood, even though governments in Europe, Asia, the Middle East and the Americas immediately  restricted travel from southern Africa .

Vaccine manufacturers have said that they are examining the variant closely and note that the current batch of remedies might still prove effective against the strain and new vaccines could be readied in early 2022 if needed.

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
34,725.47
+564.69 +1.65%
Volume: 568.44M
Jan. 28, 2022 4:54p
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/zigman2/quotes/210599714/realtime
US : S&P US
4,431.85
+105.34 +2.43%
Volume: 2.91B
Jan. 28, 2022 4:54p
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/zigman2/quotes/210598365/realtime
US : Nasdaq
13,770.57
+417.79 +3.13%
Volume: 4.24M
Jan. 28, 2022 5:16p
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/zigman2/quotes/211347051/realtime
add Add to watchlist BX:TMUBMUSD10Y
BX : Tullett Prebon
1.77
-0.03 -1.81%
Volume: 0.00
Jan. 28, 2022 4:56p
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/zigman2/quotes/202877789/composite
US : U.S.: NYSE
$ 54.33
+0.96 +1.80%
Volume: 28.59M
Jan. 28, 2022 4:02p
P/E Ratio
16.13
Dividend Yield
2.94%
Market Cap
$299.56 billion
Rev. per Employee
$883,274
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/zigman2/quotes/214419716/composite
US : U.S.: Nasdaq
$ 162.22
+7.68 +4.97%
Volume: 1.43M
Jan. 28, 2022 4:00p
P/E Ratio
4.68
Dividend Yield
N/A
Market Cap
$37.48 billion
Rev. per Employee
$8.48M
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