Billionaire hedge fund manager Bill Ackman described one of the most lucrative trades of his career during a recent appearance at The Citadel, calling a bet on a bankrupt shopping mall operator “the best investment” he ever made.
The Most ‘Contrarian’ Investment You Can Make
Speaking to cadets and guests at the Baker School of Business, Ackman recalled buying a 25% stake in General Growth Properties (GGP) in late 2008, when the company’s stock had plunged from $63 to just 34 cents per share.
“The stock went from 34 cents to ultimately $31 a share,” Ackman said, adding that “the most contrarian investment you can make is to buy stock in a company going bankrupt.”
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At the time, GGP was the second-largest mall operator in the U.S. and burdened with $27 billion in debt, $15 billion of which was coming due within 18 months. Despite that, Ackman believed the underlying assets were sound.
“The occupancies were up, the rents were up, the net operating income was up, the fundamentals of the company were solid,” he said, adding that these were “basically class A sort of the fanciest, best malls.”
Pershing Square Holdings Ltd. (OTC: PSHZF) acquired its stake in the company for roughly $60 million, and Ackman joined the board to help guide the restructuring process.
Ackman’s Tip Turned NYC Cab Driver Into A Millionaire
Ackman also recently revealed the story of a New York City cab driver who expressed his gratitude for a tip he received from him on CNBC, regarding General Growth Properties. The cab driver’s $50,000 investment in the stock, he said, turned into a $3 million retirement fund.
The rescuing of mall operator General Growth remains a key milestone in Ackman’s career, with the company being acquired by Brookfield Property Partners (NASDAQ: BPYPN) for $9 billion in 2018.
Shares of Brookfield Property Partners were down 1.58% on Friday, closing at $13.58. The stock scores poorly in Benzinga’s Edge Stock Rankings, but has a favorable price trend in the short, medium and long terms. Click here for deeper insights into the stock, its peers and competitors.
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