Bill Ackman: ‘We are long-term bullish on America’ but betting against high-yield companies

Billionaire investor Bill Ackman told CNBC on Wednesday he’s bullish on the U.S. and markets over the long term, but companies with a high debt will have a hard time surviving as the country struggles to reopen fully.

“We are long-term bullish on America; We are long-term bullish on the markets,” Ackman said in a “Squawk Box” interview. “But I would say I’m cautious on markets over the next period of time. We have today a short position in a high-yield index. We are bearish on highly levered companies.” 

“The highly-levered businesses will struggle because it will take time for the economy to reopen,” he added. “I don’t think the Fed is going to bail out companies with too much debt.” A highly-leveraged company carries a high level of debt to cash and therefore has a stronger likelihood of default or bankruptcy during a crisis.

Ackman is betting against high-yield companies at a time when the Federal Reserve is buying up recently downgraded “fallen angels,” companies that slipped from investment grade into junk due to the coronavirus pandemic. 

The founder and CEO of Pershing Square Capital Management revealed he continued to own the same positions in Hilton, Restaurant Brands, Lowe’s and Starbucks. He added his hedge fund is approximately “98% long.”

“We are not short any stocks. We are obviously bullish on America, owning restaurant companies, hotel companies, real estate development companies. These are a bet that the country will recover,” Ackman said. 

Ackman turned heads on Wall Street earlier this year by pocketing more than $2 billion in bets against markets in March. The activist investor went on CNBC in mid-March to warn investors that “hell is coming” and urge the White House to shut down the country for a month. He later revealed his firm exited the short positions on March 23, right when the S&P 500 bottomed.

His dire comments later sparked controversy as many argued that his fund would profit from further market declines. His hedge fund managed $10.7 billion of assets as of June 9.

“I really blame CNBC,” Ackman said on Wednesday. “It took 15 seconds of my interview and then went around scaring people because it was good television… I gave a very bullish message. I said I was buying stocks.”

Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.