Home » Bill Ackman’s solution: More immigrants instead of rate hikes

Bill Ackman’s solution: More immigrants instead of rate hikes

by admin
Bill Ackman’s solution: More immigrants instead of rate hikes

The US star investor’s hedge fund is trading in the deep red in the loss zone. The stock market guru is now proposing two provocative solutions that could be used to reduce the discount.

The current stock market year will probably go down in history as a decidedly bad vintage. Wherever you look, deep red performance numbers characterize the overall picture. And some stock market augurs even predict that the worst is yet to come for the markets. Since the central banks are continuing to tighten interest rates, the specter of a global recession is haunting the markets. This prospect puts a further damper on investor confidence, which is already badly damaged.

Even star investors are not spared from severe losses in the very challenging stock market environment. For example, the hedge fund Pershing Square Holdings (PSH) from the US stock market guru Bill Ackman lost around 20 percent in value in the first nine months. After all, the performance report for the first nine months represents an improvement compared to the end of June, when the investment vehicle was still a good 26 percent in the red.

Change of heart after interest rate hike

The fund’s losses were mitigated by an interest rate hedge, which Ackman entered into last year in the belief that interest rates would rise. Last fall, the illustrious hedge fund manager called on the US Federal Reserve to raise interest rates aggressively to counter emerging inflationary tendencies.

Now that the Fed has hiked rates three times in a row by 75 basis points – with hints that it will stay on the hike path – Ackman of the interest rate medicine that Federal Reserve Chairman Jay Powell is administering to the American economy seems not to be to be more convinced than already. Although inflation in the USA remains stubbornly high, stocks and bonds have recently tumbled badly. September was one of the worst stock market months in years.

See also  Germany - no longer a country of engineers? | Germany | DW

The country needs more Russians

Ackman now describes raising interest rates as a “very blunt tool” and suggests another weapon to fight inflation, such as the online portal «Institutional Investor» reported. His solution: relaxation of immigration regulationsto bring more workers to the United States. “Doesn’t it make more sense to dampen wage inflation by increasing immigration than raising interest rates, destroying demand, putting people out of work and causing a recession?” he tweeted last month.

Specifically, Ackman suggested targeting Russians trying to escape Putin’s rule. “And if we can target immigration policies to achieve important policy goals, like draining Russian talent to the US, why shouldn’t we?” he asked his followers on Twitter.

Perhaps Ackman wants to use this suggestion to distract a bit from his own problems. Because his hedge fund is currently trading at a massive discount to net asset value — about 35 percent. The star investor has been trying for years to reduce this discount on the share price. So far, however, he has not gotten the problem under control. As he recently wrote in a letter to shareholders, the discount has actually increased over time.

Neue Vision

Ackman noted that a problem for Pershing Square Holdings is that US hedge fund regulations prohibit his vehicle from trading on a US exchange. PSH is traded over the counter in the United States. This has limited the attractiveness of the company for US investors.

The enterprising investment professional immediately proposed a provocative solution: “One can imagine a world in which PSH would, over time, become the controlling owner of one or more companies that make up the bulk of our wealth and income,” he wrote. So the hedge fund manager can also imagine that PSH could not operate as an investment company in the US in the future, but rather as an operating company that could be listed on the US stock exchange.

See also  Molteni, prevent vulnerability from becoming a security problem - News


You may also like

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy