No one should be winning in the 2020 market crash after COVID-19 whiplashed nearly all sectors in the stock market. But one investor executed the greatest stock trade of all time. The name happens to be Bill Ackman, not Warren Buffett. Ackman was able to net an incredible $2.6 billion in profit.
Fork in the road
Bill Ackman knew just what to do when he arrived at the fork in the road in February 2020. His hunch was that the coronavirus pandemic would impact profoundly on the stock market, believing that too many investors were not pricing the market correctly.
The hedge fund manager and founder of U.S.-based Pershing Square Capital Management read the market correctly. Ackman warned, “Hell was coming,” although he did not stop buying stocks even when the market was bottoming out.
Ackman needs to decide, as COVID-19 was spreading spreading. The market risks and volatility were exploding. Ackman’s instinct was to protect Pershing’s most significant clients, pension funds for teachers and emergency medical workers.
His hedge fund management company bought $27 million worth of credit protection on various global investment-grade and high-yield credit indices. The move was aimed at protecting Pershing from steep stock market falls. After cashing in on March 23, 2020, the hedges generated a $2.6 billion windfall.
Seeking growth opportunities
Pershing was able to protect 100% of its investors’ 58% gain in 2019 because of Ackman’s brilliant maneuver. Similarly, Pershing sold its entire stake at Berkshire Hathaway in May, as Ackman feels he wouldn’t generate higher returns from Buffett’s slow and steady pace. His group is looking to invest in higher-growth opportunities.
Ackman sees strong growth potential in the healthcare space. Pershing increased its holdings in Agilent Technologies, a manufacturer of analytical laboratory instruments and equipment.
If you’re looking for a TSX healthcare stock with promising potentials, WELL Health Technologies (TSX:WELL) is worthy of consideration. This $370.89 million company owns and operates a portfolio of primary healthcare facilities. It also provides digital electronic medical records (EMR) software services, and telehealth services.
Market analysts covering WELL are forecasting the stock to climb by 26.81% in the next 12 months. As of writing, the price is $2.76 per share. The bullish sentiment stems from the fantastic year-over revenue growth in the first quarter of 2020.
WELL reported record quarterly revenue (quarter ended March 31, 2020) of $10.23 million or a 38% jump from the same period in 2019. The adjusted EBITDA loss, however, was $245,932. Still, the business outlook is very encouraging.
The WELL EMR Group digital services saw a 918% revenue growth for the quarter. These revenues come from the high margin and recurring Software-as-a-Service (SaaS) revenue of its OSCAR EMR related services.
Since the launching of WELL’s VirtualClinic+ telehealth service in March 2020, over 800 healthcare practitioners are on board. The virtual booking appointment is now 1,000 per day. Expect WELL’s clinical revenue to be resilient and swell even more as its owned clinics remain open throughout the health crisis.
Bill Ackman might be the billionaire to watch in 2020 rather than Warren Buffett. The activist investor is winning over the value investor.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short June 2020 $205 calls on Berkshire Hathaway (B shares).