But even in late February, something strange had happened. The sellers of these financial insurance policies weren’t distinguishing between riskier borrowers and safer ones, charging barely any more for swaps on lower-rated debt. “The market is completely mispricing this,” Ackman told his team on that Sunday conference call. “Start buying.”use the word, Ackman was calling the financial market what it had clearly become: a bubble, and one that was at risk of popping.
The S&P 500 gained 400 percent between March 2009 and March 2020 in an historic bull market. Debt got cheap and plentiful. The oddity that Ackman had noticed—a lack of discernment among bond investors who charged barely more interest to riskier borrowers than safer ones—grew more pronounced. Near-zero interest rates set by the Federal Reserve forced investors to invest in anything that might return a little profit, pushing them further and further into riskier territory.
The billionaire was as folksy as ever in his reply. In an email dictated to his longtime secretary—the octogenarian doesn’t use email—he said that he hoped to see Ackman at this year’s meeting, set for May 2, and invited the investor and Oxman to a private brunch. “Unfortunately we can’t include Raika,” he said of Ackman’s infant daughter, “though if she owns Berkshire, I hope she continues to vote for me and Charlie” as members of the board of directors.
Or who are amoral enough to profit from others misfortune, yes.