Ackman, who oversees Pershing Square Capital Management, initially took out the hedges - credit protection on investment grade and high yield credit indices - at the start of March as panic caused by coronavirus began cratering markets globally.

In a letter to investors filed by his listed fund, Pershing Square Holdings Ltd, on Wednesday, Ackman said subsequent market falls combined with steps taken by U.S. state governments to limit the spread of the disease and federal and Treasury monetary support, had made him more positive on the outlook.

In anticipation of a $2 trillion (1.70 trillion pounds) economic rescue package - signed by U.S. lawmakers overnight - Wall Street snapped back from 3-year lows on Tuesday to post its biggest one-day gain since 1933.

"We became increasingly positive on equity and credit markets last week, and began the process of unwinding our hedges and redeploying our capital in companies we love at bargain prices that are built to withstand this crisis, and which we believe will flourish long term," Ackman said.

Ackman said Pershing Square completed its exit from the hedges on March 23, generating proceeds of $2.6 billion, and had reinvested most of the money in existing holdings Agilent, Berkshire Hathaway, Hilton, Restaurant Brands and Lowe's.

The fund also bought into several new holdings, including Starbucks, which it had previously exited in January. After the investments, the fund had maintained a cash position of about 17% of portfolio, he added.

However, in a note of caution, Ackman said he expected markets and the firm's performance to remain volatile, throwing up opportunities that could lead them to sell out of recently bought holdings or even go back on the defensive.

"We may also choose to reestablish similar or different forms of hedges or raise more cash based on developments with the coronavirus and other market factors. In other words, we are more likely to have higher portfolio turnover in this environment."

Ackman also reiterated his call - flagged in a tweet to U.S. President Donald Trump last week - to close the whole country for 30 days, something he expected to happen soon.

"You don?t need to be a virologist, immunologist, or epidemiologist to understand why a 30-day nationwide lockdown makes sense," he wrote, adding it was crucial to help the healthcare system catch up and prevent deeper economic damage.

As part of efforts to help scale up coronavirus testing kits, Ackman said the The Pershing Square Foundation had invested an unspecified amount in Covaxx, a newly formed subsidiary of United Biomedical Inc.

By Simon Jessop