Thomson Reuters

Pershing Square Capital Management CEO Bill Ackman minted a multibillion-dollar profit as coronavirus fears tanked US stocks.

The hedge-fund billionaire turned a $27 million position into $2.6 billion through defensive hedge bets, a Wednesday letter to investors said. The profit offset losses elsewhere in the firm's portfolio and helped Ackman's public fund land a 7.9% gain in March through Tuesday's close, The Wall Street Journal reported. The S&P 500 slid 17% over the same period.

Pershing Square used credit protection on investment-grade and high-yield bond indexes to land the massive profits. The assets rise in value as the odds of corporate defaults increase. As measures to combat the virus outbreak cut into economic activity, corporate bond ratings tanked, and investors feared the worst.

The fund was able to purchase the investment vehicles about a month ago "at near-all-time tight levels of credit spreads," so the risk of loss was "minimal at the time of purchase," Ackman wrote.

Read more: GOLDMAN SACHS: These 13 cheap stocks are poised for years of better-than-expected profits — and they're must-haves as the coronavirus wipes out earnings in 2020

The hedge fund began liquidating its protective bets last week after unprecedented action from the Federal Reserve and the Treasury Department shifted sentiment toward corporate credit health. Ackman fully exited the position on Monday, the same day the US central bank announced it would begin buying corporate bonds to prop up the battered market.

Ackman has since used the profits to bolster Pershing Square's investments in Berkshire Hathaway, Hilton, Lowe's, Restaurant Brands International, and Agilent. The fund also reestablished a stake in Starbucks after selling its position in January.

The fund founder used Twitter and an appearance on CNBC last week to predict that the coronavirus outbreak would cause economic turmoil if the US didn't institute a 30-day shutdown.

Ackman urged CEOs of his portfolio companies to take precautions as "hell is coming" and said a national stay-at-home order was "the only answer" for saving the economy. Markets slid further through the March 18 session during Ackman's emotional CNBC interview.

Read more: 'Still too high': Goldman's global equity chief lays out 4 reasons why the stock market will melt down further before it fully captures the coronavirus crisis

After commentators accused him of fearmongering and intentionally driving markets lower, the investor said that he was "confident the president will do the right thing."

Ackman said in his Wednesday letter that he still believes a monthlong shutdown is necessary and that the US "can be reopened carefully as China has so far successfully done" once the lockdown is over.

Now read more markets coverage from Markets Insider and Business Insider:

Senate passes $2 trillion coronavirus relief bill, which includes checks for Americans and small business loans

Goldman Sachs: 4 key differences make the coronavirus-fueled bear market more worrisome than past slumps

Irreverent Reddit forum Wall Street Bets is hosting a live trading event in the hopes of cashing in on the success of esports

NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption