Saturday, January 12, 2008

Bill Ackman, Up 22% in 2007, Boosts Bet Against MBIA

William Ackman, whose Pershing Square Capital Management LP hedge fund returned 22 percent last year, increased his bet against MBIA Inc. and said the bond insurer may need to raise $10 billion in capital to protect its policyholders.

Pershing Square increased its short positions in stock of MBIA, the biggest U.S. guarantor of bonds, and Ambac Financial Group Inc., Ackman said in an interview on Bloomberg Television today. His New York-based fund is buying more credit-default swaps of MBIA's holding company, which are used to bet on a company's ability to repay debt, he said.

``Most every week we have increased our short position,'' he said.

Ackman, 41, who co-founded a hedge fund, Gotham Partners LP, less than a year after graduating from Harvard Business School, said his bond-insurer bets gained billions of dollars as the stocks and bonds tumbled in recent months.

His stakes in Target Corp., the second-biggest U.S. discounter, and McDonald's Corp. forced executives to take steps to lower costs and consider asset sales. In December 2005, while pressing McDonald's management, Ackman worked a half-day at one of the chain's restaurants in South Florida at the invitation of a franchisee.

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