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Bill Ackman Puts Part of His Personal Fortune in Covid-19 Testing

Scott Deveau

(Bloomberg) -- Bill Ackman said he has invested a portion of his personal wealth to help manufacture antibody testing kits produced by Covaxx, a newly formed subsidiary of closely-held United Biomedical Inc., amid the outbreak of the coronavirus.

Ackman has repeatedly called for a complete shutdown of the U.S. for 30-days to help combat the spread of the Covid-19 virus. He has also called for antibody testing, like the one Covaxx develops, across the country to determine who has been contracted the virus.

“The key to a successful reopening beyond the maintenance of social distancing, hand washing, mask use and other related practices is a broad-based testing regime and tracing program,” Ackman said in a letter on Wednesday to investors in his hedge fund, Pershing Square Capital Management.

“This will enable the inevitable viral breakouts to be identified early and minimized with localized quarantines, reducing the impact on the overall U.S. economy and the need for future shutdowns,” he said.

Hedges

Ackman made a roughly 100 times return on hedges he had put in place to protect Pershing Squares’ $6.6 billion portfolio against the impact of the virus, according to the letter.

His firm paid roughly $27 million for the hedges, which were made in the form of purchases of credit protection on investment-grade and high-yield credit indices. The hedges generated $2.6 billion in proceeds by the time he exited them on March 23.

He said he has since redeployed the capital by investing further in his portfolio companies, including Lowe’s Cos., Agilent Technologies Inc., Hilton Worldwide Holdings Inc., Restaurant Brands International Inc., and Warren Buffett’s Berkshire Hathaway Inc. He also reinvested in Starbucks Corp.

“The proceeds of the hedges have enabled us to become a substantially larger shareholder of a number of our portfolio companies, and to add some new investments, all at deeply discounted prices,” he said.

Ackman said in an interview on CNBC on March 18 that “hell is coming” if drastic measures were not taken to combat the virus. A week later, he said in an interview with Bloomberg TV he had made a $2.5 billion “recovery bet” on a bounceback, after gaining confidence “that the president and his team are heading in the right direction.”

Covaxx has already deployed over 100,000 Covid-19 tests in China, and is currently testing in San Miguel County, Colorado. The company believes it can scale the tests to hundreds of millions in “relative short order,” Ackman said. The billionaire made the investment through the Pershing Square Foundation, which manages his personal wealth. He did not disclose the size of the investment.

Health officials in San Miguel County, home of the popular ski-town Telluride, teamed up with United Biomedical earlier this month to collect blood samples to test the kits and provide free screening to people in the area.

The tests can determine whether a person has been infected by Covid-19 within hours, rather than the days it takes for the current, drive-thru nasal swab tests.

Broader antibody based screen will give an accurate estimate of what percentage of the population is infected, Ackman said. That will allow more accurate data on the virus’s characteristics, such as how many people become critically ill and how many have only limited symptoms.

“Imagine how differently and effectively we could have managed this crisis if we actually knew who was infected,” he said.

United Biomedical has spent years producing vaccines for animals and working on human treatments for diseases like Alzheimer’s and Parkinson’s. It manufacturers its test kits on Long Island, New York.

The company has been around for more than three decades. Its animal vaccines have been used to protect billions of farm animals from foot-and-mouth disease and to chemically castrate pigs. It also has developed blood-screening kits and a test for SARS, or Severe Acute Respiratory Syndrome.

“We believe it is inevitable that in order to halt the advance of the virus and preserve the ability of local, city, and state health-care systems to deal with the volume of critical care patients, nearly all states will eventually initiate strong-form, non-essential business closures and stay-at-home regulations,” Ackman said.

(Updates with additional details in the final paragraph; An earlier version of this report corrected the return on Ackman’s hedges)

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