Billionaire investor Bill Ackman announced earlier this month that he had been hedging his portfolio against market volatility spurred by the coronavirus. The bet paid off handsomely.

Ackman’s Pershing Square Capital Management hedge fund laid out $27 million to buy credit protection on global investment-grade and high-yield credit indexes. The purchases, which were made late last month when credit spreads were tighter, carried limited downside risk but the potential for significant upside. Ackman said Wednesday that he finished...