Star investor and corporate raider Carl Icahn’s bet on the downfall of brick-and-mortar retailers produced a $US1.3 billion ($1.82 billion) gain during the first half of the year as they struggled in the coronavirus pandemic.
The profit came from a short position on [bet against] commercial mortgage-backed securities, Icahn Enterprises said on Monday in a regulatory filing. Icahn’s publicly traded holding company has committed capital to his proprietary investment funds and thus reports on their returns quarterly.
Icahn, 84, began making the bet, frequently called the “mall short,” in mid-2019 by purchasing credit default insurance using CMBX 6, an index highly exposed to shopping mall loans.
The likelihood of bad loans and credit defaults soared in March as the COVID-19 pandemic led to store closures and prompted more consumers to shop online, accelerating a trend already well underway.