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Ackman to Trump: Shut Down America
The Pershing Square CEO suggests a “spring break” to halt the spread of the virus and save the economy.
Bill Ackman wants President Trump to put Americans on spring break for a month — and pay everyone’s wages — in an effort to stop the spread of the coronavirus.
The Pershing Square Capital CEO made his plea to President Trump on Twitter shortly after the market opened on Wednesday morning, when the Dow immediately took a 1,000 point dive.
“Mr. President, the moment you send everyone home for Spring Break and close the borders, the infection rate will plummet, the stock market will soar, and the clouds will lift. We need your leadership now!” Ackman wrote.
Speaking by phone later to CNBC’s Scott Wapner for almost a half hour, Ackman said, “America will end as we know it unless we take this option.”
Ackman was one of the earliest on Wall Street to sound the alarm about the devastating effects of the coronavirus — hedging his portfolio and sending his employees home for the duration on February 27.
Even though they began working from home very early in the crisis, two people of his small staff — 4 percent — already have symptoms of the virus, but only one has been able to get tested, he said.
Ackman himself decamped to his home in Bridgehampton, taking family members — including his aging parents — with him.
“I am not going to kill my father,” an emotional Ackman said on CNBC. “And so I went into lockdown almost a month ago to save my father’s life.” Ackman’s father, who is 81, is a lung cancer survivor who has lost two-thirds of his lung capacity.
Ackman said he began turning bearish in late January after waking up from a nightmare following reports from China. Because the disease was happening in China “far away, most people did not take it seriously. When I did the math, the laws of probability told me this is going to affect everyone,” he explained.
On March 3, Ackman told investors in his publicly traded hedge fund, Pershing Square Holdings, that he had taken a big hedge some ten days earlier. It was the first time he has been so bearish since the financial crisis of 2008.
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“We have done so because we believe that efforts to contain the coronavirus are likely to have a substantial negative impact on the U.S. and global economies, and on equity and credit markets,” he told investors.
At the time, “everyone” said “you’re crazy, you’re an alarmist,” Ackman told Institutional Investor. Ackman is typically long and doesn’t hedge at all.
But the hedge has protected his portfolio, which includes a hotel and two restaurant chains. As of March 9, Pershing Square Holdings had gained 2.8 percent for the year.
Ackman told CNBC that Hilton Worldwide Holdiings, which he owns, is the canary in the coal mine. The stock is down more than 50 percent this year. “It’s going to zero,” he said, unless his proposal is enacted. “No business can survive a period of 18 months without revenue.”
That said, Ackman said he was buying Hilton stock today because he believes that sooner or later, Trump will be ordering a national shutdown, and other countries will follow suit. Countries like South Korea that have taken such draconian measures have begun to recover.
“This is the only answer, and if the president hasn’t gotten to this answer, he will get there soon,” Ackman said. “He wants to get re elected. If he can save the country from the coronavirus, he will get re-elected.”
Ackman’s extremely bearish comments came as the market continued its downward descent, triggering a stock market circuit breaker.
He said he had spoken with CEOs of the companies he owns and encouraged them to stop share buyback purchases, draw down credit lines and stockpile cash b because “hell is coming.” Ackman has more than 34,000 followers on Twitter, though he uses the platform rarely. This morning, he went on at length with his plea.
“Mr. President, the only answer is to shut down the country for the next 30 days and close the borders. Tell all Americans that you are putting us on an extended Spring Break at home with family. Keep only essential services open. The government pays wages until we reopen.”
“With exponential compounding, every day we postpone the shutdown costs thousands, and soon hundreds of thousands, and then millions of lives, and destroys the economy,” he added.
“Please send everyone home now,” he continued. “With your leadership, we can end this now. The rest of the world will follow your lead. A global Spring Break will save us all.”