“What I’m proposing is a 30-day lock-in to the entire country, a coordinated 50 state lockdown,” he said. “It allows companies to plan for the future as they don’t need to fire employees, particularly with the government backstop…. I call it the rip-the-Band-Aid-off strategy.”
Ackman said he’s spoke with CEOs of large banks, asset managers and food businesses, and they are unanimous in their support for this plan.
“You know, the president himself said he doesn’t want the cure to be worse than the problem,” Ackman noted. “Do we risk sort of dragging this out and really crushing capitalism if we can’t fix it now and then move on and have it behind us? Yes. So the president is right.”
The problem with that strategy is epidemiologists are unconvinced that a couple weeks or a month is sufficient time to control the outbreak. Parts of China, for example, were in lockdown for longer, and critics have said the country’s decision to ease restrictions could cause the virus outbreak to run rampant again.
Ackman, however, is hopeful. He said he and his hedge fund, Pershing Square Capital Management, have been buying up stocks — about $2.5 billion worth — in the past week, as values have plummeted in a sharp sell-off.
“We bought a large hedge that became much more valuable when markets declined,” Ackman said. “And over the last 10 days or so, we’ve been aggressively buying stocks that have been marked down. So we’ve been, you know, betting that the economy is going to recover and that great companies like a Starbucks … and other consumer type franchises that we’ve specialized in are going to are going to recover from here.”