Pershing Square’s Bill Ackman spoke with Bloomberg TV anchor Stephanie Ruhle from the Harbor Investment conference in New York today. Ackman said “if 3G ran McDonald’s, we’d own the stock for sure.” He also said, “I think the board did the right thing in making a change in management.”
Stay tuned for more coverage!
On Zoetis, Ackman said, “we’ve had a very nice relationship with Zoetis and the board. And I think the board and management share all the same goals we have and to make this, you know, a more valuable, more profitable company. And I think they’ve done a very good job since the company was spun-off. And I think there’s a lot of potential.”
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Pershing’s Ackman on Pharma Deals, Zoetis, Activism
Bill Ackman, chief executive officer of Pershing Square Capital Management LP, talks about Pershing’s investments in Zoetis Inc. the outlook for consolidation among mid-side U.S. pharmaceutical companies and shareholder activism. He speaks with Stephanie Ruhle at the Harbor Investment Conference in New York on Bloomberg Television’s “Taking Stock.” Bloomberg’s Pimm Fox also speaks.
Ackman: McDonald’s Did Right Thing Changing Management
Pershing Square’s Bill Ackman comments on the management change at McDonald’s. He speaks with Bloomberg’s Stephanie Ruhle at the 2015 Harbor Investment Conference in New York.
Full transcript:
STEPHANIE RUHLE, HOST: Bill Ackman, would you have guessed it, he is just a laugh riot over here?
Bill, you just left the stage. You were sitting down with Ray Dalio. And for me watching two iconic investors sort of go through their investment practice was extraordinary.
What did you learn from Ray?
BILL ACKMAN, FOUNDER, CEO, PERSHING SQUARE CAPITAL: I learned a lot. I mean I really didn’t know how he did what he does. I’m sure I completely understand at this point.
But remarkable how he’s built his company and his organization and his approach. And I (INAUDIBLE)…
RUHLE: Did you have a single take-away that’s going to impact you?
ACKMAN: Well, his point was much of what we do can be systematized and you can write a program to do it. That was his sort of argument.
I don’t think that’s — I think that’s — maybe there’s some element of truth to that.
RUHLE: It’s the opposite of what you do.
ACKMAN: It very much is the opposite in that he is all about what he’s (INAUDIBLE) almost artificial intelligence, a series of rules based on history and analysis of investment situations that guide his allocation of capital.
And I found it fascinating.
RUHLE: But not anything you would replicate?
ACKMAN: No. No. We do very few things. We do one or two things a year, so it can be much more handcrafted. It’s almost like we’re old-fashioned investors and he’s the new — the new new thing.
RUHLE: Well, let’s talk about what you’re doing.
Let’s start with the WebEx. Someone from Pershing Square is now on the Zoetis board.
ACKMAN: Yes.
RUHLE: How is that going?
ACKMAN: That’s going great. So Bill Doyle from our team joined the board. Bill is, you know, Billy was in the health care business. He was at J&J for a meaningful period of time.
And we’ve had a very nice relationship with Zoetis and the board. And I think the board and management share all the same goals we have and to make this, you know, a more valuable, more profitable company.
And I think they’ve done a very good job since the company was spun-off. And I think there’s a lot of potential.
RUHLE: Where do you think they should be making cost cuts?
ACKMAN: You know, it — rather than — I would say this is a business that was owned by Pfizer. It was spun-off and had to become an independent public company. It’s more about, you know, building a culture and — and running a business.
But, you know, I’m limited in what I can say now that we’re on the board.
RUHLE: Did you support their acquisition of Abbott Animal Health products?
ACKMAN: You know, I don’t know the details on the acquisition, but it sounded strategically like it could make sense.
RUHLE: Well, let’s just talk general health care sector.
What do you think of consolidation right now?
ACKMAN: I think it’s going to happen. I think, you know, what’s interesting about the — the taxon version — or the anti-taxon version regulations, I think it’s going to push more sort of midsized pharmaceutical companies to sell probably to foreign buyers, you know, and — and the foreign buyers are probably more likely to take the headquarters offshore than a U.S. buyer inverting into a foreign company.
So we may have, for better or for worse, we may have a fair amount of consolidation with a foreign buyer with a more favorable territorial tax structure buying U.S. companies…
RUHLE: (INAUDIBLE).
ACKMAN: — because it’s going to be hard for U.S. companies to compete with the very unfavorable tax structure.
RUHLE: What does Valiant mean to you right now?
ACKMAN: Valiant means to me a very well run, incredibly disciplined company. I mean we spent, really, almost a year working pretty — very closely, as closely as you could work with another public company. And we had a call — literally a call at 6:00 p.m. every night. I mean we really got to know each other.
And it was a great experience. So we think very highly of them.
RUHLE: And now you have no connectivity?
ACKMAN: No, we keep in touch. For sure.
RUHLE: And what’s in store for Allergan?
ACKMAN: Allergan, I think and Actavis, I think it would be a very good combination. You know, we’ve gotten to know Brent Saunders and think highly of him. So I think it’s going to be a good deal.
RUHLE: Are there other sectors that you think are sort of ripe for activism right now?
ACKMAN: You know, I don’t think it’s a sector-driven thing. I think…
RUHLE: It’s just a sucky company thing?
ACKMAN: I don’t know, even a sucky company thing. I just think that, you know, we want through a period of time where we went from very active owners of businesses 100 years ago to increasingly more passive owners of businesses, right?
This trend from an individual owning 20 percent of — of a company to a mutual fund, you know, having broad-based mutual funds to having ETFs, which are almost like a second derivative away from ownership with people constantly trading.
And now I think the rise of shareholder activism is almost a — kind of pushing us back to the — to the past, where there was a much closer connection between the owner and the — and the way the business was run.
RUHLE: Does the strength of the U.S. dollar and how much it’s hurting so many companies, is it incentivizing you to get involved in certain companies you weren’t looking at just a year ago?
ACKMAN: Well, I do think that there are a lot of companies where the market and the analysts have yet to re-price the business on the basis of the move in currencies. And so I think that’s some of the headwind for the stock market.
RUHLE: What kind of companies, just so we can — you know, I don’t need…
ACKMAN: No, I would say…
RUHLE: — specific names.
ACKMAN: — U.S. companies with, you know, global revenues. Kind of…
RUHLE: Wouldn’t that be any company?
ACKMAN: You know, a lot of companies, the currency headwind is a real thing and in many cases, analysts’ models have not been updated to reflect the — the move in the currencies.
RUHLE: Fannie and Freddie, where do you stand?
ACKMAN: Well, that’s…
RUHLE: Frustrated.
ACKMAN: No, no, we like them a lot. We — I think just with the passage of time, we’ll get to the right answer. You know, it’s interesting that…
RUHLE: Really?
What makes you think that?
ACKMAN: Well, Fannie and Freddie are the — collectively, the long-term financial institutions in the world, right. They’ve got almost $6 trillion of outstanding obligations.
Embarrassingly, they are the least well capitalized financial institution in the world, right. If you think of them as one institution, they have no capital.
Why do they have no capital?
Because the U.S. government, every quarter, is taking out 100 percent of their profits, right. So you have the housing finance system, this is supposedly an off balance sheet company. It’s not consolidated into the balance sheet of the U.S. government.
And the U.S. government is taking 100 percent of the profits and, you know, these — these are the — the
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