Subprime Savant: Bill Ackman
Which investors saw the early warning signs of the current mortgage mess? At Fast Money we call them subprime savants! And few compare with Bill Ackman. He began betting against leading bond insurer MBIA five years ago!
Long before bond insurers unleashed a deluge of fear that wiped away billions in wealth, Ackman went straight to the source and sat down with a key player. “In August of 2002 I met the CEO of (MBIA),” he explained in a recent CNBC interview. “And right around that time I started shorting the stock.”
After researching a reported 140,000 documents on MBIA, the hedge fund manager suspected the bond insurers were guarantying securities ultimately based on rotten subprime loans. He correctly anticipated that one day Ambac and MBIA would be pushed to the brink of collapse.
Now this subprime savant is going long with a big bet on retailer Target. Should you follow Ackman on his next act? (In case you’re wondering, Ackman’s fund returned 22% in 2007.)
I often trade alongside Ackman, reveals Karen Finerman. I find him to be very thorough and persistent but I don’t have a Target position.
He often owns a high enough percentage of a company that he can force change, adds Jeff Macke. If nothing more it speaks of his ability to get things done. However, I recommend Wal-Mart right now, because the stock seems to be working.
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Trader disclosure: On Apr.2, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MSFT), (YHOO), (INTC) Finerman Owns (GS); Finerman's Firm And Finerman Own (HD); Finerman's Firm Owns (CROX), (MSFT), (NYX), (TSO), (VLO), (WMT), (YHOO); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (COF); Pete Najarian Owns (AAPL), (CSCO), (ETFC), (MU), (NOK), (TSO) , (YHOO), (XLF); Pete Najarian Owns (AA) Calls, (BSC) Calls, (COP) Calls, (MSFT) Calls, (LEH) Puts, (MER) Puts, (OIH) Puts; Pete Najarian Has A Long Diagonal Time Spread In (RIMM)