Bill Ackman: ‘We are long-term bullish on America’ but betting against high-yield companies

Investor Bill Ackman said he’s bullish on America over the long term, owning restaurants and hotels real estate development companies.

However, the billionaire said highly levered companies (Companies with Lots of Debt) will have a hard time surviving as the country struggles to reopen fully.

“I’m cautious on markets over the next period of time. We have today a short position in a high-yield index. We are bearish on highly levered companies,” Ackman said. 

Billionaire investor Bill Ackman told CNBC on Wednesday he’s bullish on the U.S. and markets over the long term, but companies with a high debt will have a hard time surviving as the country struggles to reopen fully.

“But I would say I’m cautious on markets over the next period of time. We have today a short position in a high-yield index. We are bearish on highly levered companies.” 

“The highly levered businesses will struggle because it will take time for the economy to reopen,” he added. “I don’t think the Fed is going to bail out companies with too much debt.” Such companies carry a high level of debt to cash and therefore have a stronger likelihood of default or bankruptcy during a crisis.

Ackman is betting against high-yield companies at a time when the Federal Reserve is buying up recently downgraded “fallen angels,” companies that slipped from investment grade into junk due to the coronavirus pandemic. 

cnbc