Wednesday night, the mondelez sale was for quote, rebalancing as the position crew outsized come paired to other holdings like valeant that dropped in value. That sparked wild speculation about whether he might have gotten a margin call or something else. I reached out to him this morning for comment and to give him the opportunity to set the record straight on the current state of his firm. Ackman telling me we dont use margin leverage. Never have and never will. Others speculated he might be preparing for a wave of redemptions due to recent declines which he said was not the case. He told me only about 2 of asset which is total more than 11 billion were redeemed at the last opportunity to do just that on february 15th, a time when much of the negative valeant news was widely known but before the recent plunge. He said 83 of his investors that could have redeemed instead rolled their money ahead and remained in the fund. One longterm investor in the firm told me this morning he has no desire to leave. Were sticking with him for sure the investor told me. Pointing to the longterm track record that he called steller. Also pointing out several others as well as reasons to remain optimistic. That investor blaming others for much of mr. Ackmans ills. Generally speaking its been all negative and theres been a piling on effect as a result. Mr. Ackman himself pointed to his other investments in businesses doing well. The next redemption opportunity wont come until around midway he told me but was optimistic his investors would stay in the fund and went into great detail about the firms financial position. He said Pershing Square has large cash balances in every one of its funds averaging 14 to 15 throughout the portfolio. He also pointed to three sources of socalled permanent capital or money that cant be redeemed. 4 billion from his publicly traded vehicle Pershing Square holding which is is traded in amsterdam. A billion dollars from a recent bond offering and just more than a billion or so in what was employee capital. He called other money longterm lockup capital where investors remain highly restricted on how they can redeem that money. As is common in many hedge funds it could take the investors up to two years to get all of their cash back if they wanted. Now on the issue of valeant specifically where he suffered steep losses lately, especially, he admitted the challenges ahead but said he could help fix the company. Quote, valeant is a problem but we know what to do. Thats what he told me today as theres wild speculation about the true state of his fund. Whether he had gotten a margin call which he says is just not true. Doesnt use margin leverage, never has and never will. What do you make of this whole thing . Well, i think too much is being done to pursue ackman and his fund to say okay, were going to short positions because were investing in a fund which actually a former partner of his manages and they were in the same strategy. They actually run net long or gross exposure about 85 to 90 . Sometimes gets down and say theres a typical hedge fund, longterm equity 150 . No doubt about that. However, the investor said that you have this negative press loop. That guy is completely off base because bill invites the press. Thats one of his things. Not too many other managers i know set up websites with 300 page documents on their logs. Nor do they advertise their shorts. This notion of the piling on thing though, whether others, its this sort of thing where others are trying to take advantage of weakness in various stock positions and continue to pile on. Its not uncommon on the days where theyre going opposite to mr. Ackmans position that all of a sudden you would see a whole slew of stocks in the portfolio down. Welcome to wall street. Thats what wall street is all about. Thats recognizing when theres opportunity. Maybe when someone is on the ropes recognizing when theres a possibility. The other way in terms of momentum. The concern that i have regarding this conversation is the liquidity issues surrounding the positions that mr. Ackman seems to involve himself with. Now thats fine if he wants to take that risk. He will be rewarded for it when things go his way but you have to understand that it seems as though most of the positions he takes are him seeking to hit the home run most of the times and with that youll have extensive volatility and an absence of liquidity and thats what you have right now. To your point if youre going to be until the headlines and you dont have the liquidity youll get double digit down days. Part of the issue is when you have a very concentrated portfolio and within that portfolio you have taken or your firm has taken board seats you become restricted in the types of moves that you can make. Perhaps in times of stress. Youre just restricted in some cases from selling things like valeant or Canadian Pacific for example. Just things like that where they have actual board seats. Right and that is a problem to what joe is saying. That is a serious problem but i think a lot of the money that people were putting on to short positions in his other holdings, a lot of that is virtually ending here. I dont think people are accelerating into it. I think those that elect to stay in those same short positions betting against ackman if you will because hes in pah or any of these others, the people that are piling in now are late because this has been going on for weeks and months. The professional investors that we talk with and that ping us back and forth, they were slamming into the short positions weeks and months ago. Not now. Most of them are peeling out of the same positions now and in light of what you just said about the lack of leverage and never used it, never will, i think a lot of folks are going to get squeezed over the shortterm because theyre johnny come latelies into these short positions. The Biggest Issue is not with ackmans holdings and i wouldnt say theyre piling on the shorts. Thats still a short here. Thats a fundamental short. But the piling on ackman. Right. Look. Thats the issue were talking about. Thats what the shareholder was eluding to when he he told me he had a great track record. 14 to 16 but if you want to be fair put it back into that track record. That was a separate vehicle. That was 2 billion of capital that went poof. So theres also the side pockets. Still gives them a great track record but you have to be fair about putting everything in there but the issue is we avoid the largest funds. Very few large funds. 10 billion funds. Viking has done great. Put up the numbers. They have to take bigger positions to put up the returns. I think when i called bill and said look, theres a lot of speculation about whats really happening inside your firm, set the record straight with me right now, i think maybe part of his point was to say, look, the death of Pershing Square has been greatly exaggerated today as people are talking about the size of the positions that are down and the losses here and the losses there. And probably some of that has to do with the idea like he was talking about, not the redemptions a lot of us would have expected but it takes so long. The time frame has already been in so do you want to be one of the folks getting out at the bottom . Not that necessarily hes at the bottom but probably getting pretty close and the one thank that all of us know i can tell you when theres blood the sharks start circling and the main train gets much, much worse and the acceleration because you know who is long and you know who is short and when they come walking in to try to execute a position its very, very interesting to watch how the me tricks of the inside trading world works and everything starts moving against it. I only met him once. You spoke to him. I just almost feel bad for him. He must be exhausted. He has to be burn out. But he put himself there. Were all getting older on wall street. Who needs the headache. He put himself in a position to go in front of everybody and plead his case time and time and time again. Right . Im not jumping on ackman. Im just saying he put himself in this position. Let me answer pete. Pete is 100 right. When i say i feel bad for him, its almost like why go through this . Why take the volatility . Youre a brilliant man. Managed a tremendous amount of money. Go find stocks and facebook. Apple, energy stocks. Why do you need the volatility. Let me pose it to you this way. Lets just take valeant for example. I think part of it might be why is bill ackman maybe he feels why am i being made the public face of the board for a lot longer than i have yet whenever valeant gets mentioned its my picture next to the story. He was in front of the story. He has been the guy in front of that story. He was behind the scenes. Everybody knows who is in what stocks scott but who is out in front of the cameras. He made him his partner. So thats why. Hes in bed with them. He more than any of the other holders was front and center. Thats why. A four hour long Conference Call defending valeant when all of this stuff came out. And giving these examples and slide shows. Everything else scott and i go back and forth about this but i think its a correlation to the cam newton theory where everybody sees him doing Everything Else and when things dont go well they say oh my goodness. You got to feel bad for this guy. When you put yourself out there you have to understand what that really means. I agree with that. Also sold some near the highs. So they have cashed out. I dont know that bill has done that along the way. Hes a smart guy. Hes going to figure it out. Theyre not in jeopardy. The assets will decline and im not sure when talking about redemptions if those are people that filed their notice for redemptions or if they were actual redemptions so im not sure that we have clarity on that. The most fascinating thing that i heard you say is the last thing. It was such a cliff hanger. He says about valeant we know what to do. Im waiting for chapter 2. What is he going to do to fix this company . He says they now have a board member. Theyre going to get more involved. What are they going to do . Replace management . Thats the question. As for what people are expecting over the next couple of weeks now people are speculating about what theyre going to sell and they have a note out today laying out 6 billion worth of assets they could potentially sell. These are things like neurologist business worth according to bmo about 2. 5 billion but that includes a lot of assets where they raise the price on them. Theyre calling them toxi assets. How do they sell them . Opthamology these could bring in 6 billion. But is anybody going to want to buy them . The obvious key issues with valeant, you know this, and ackman himself pointed it out on numerous occasions and we just got another example of it this week, the alleged typo in the press release versus what he said on the actual Conference Call. Had that not happened and they simply delivered the number that they thought as their guidance, yes it would have been below what the street had expected but do you think the stock would have gone down 50 that day . It would have gone down quite a bit because that wasnt the only thing that shattered peoples confidence. I got it but 50. How about the 10k . To stooechs point theres fundamentally something wrong with the company. Can you think of any other company that bill ackman has been involved in where he wouldnt be out there saying get the ceo out of there . He destroyed the company. He built it. He destroyed it. Its been terribly managed, the entire process. Not only that but him going away and then a nondeal road show and then they cancel the nondeal road show, its been viewed as a passive position and now just given what has happened and he put out the press release the other day saying that they are going to take a more proactive roll. Now thats changing too. Its get a Crisis Management firm on their side to help them with their communications to proofread their press releases and make sure that theyre giving people in term of guidance. Why havent they hired someone to help them. Its a tiny thing but you have so much to fix. Why not start with the Little Things that you can do . Its very weird. Mega, thanks. Meg with the latest on valeant. Heres whats coming up on the Halftime Report. Still ahead, defense or offense . You sound like a big ch choo choo train. Investors making a myth in the trading this year. But now is it time to get more aggressive . That debate is coming up. Plus the investor who is calling for just that joins us live. And nike goes back to the future. The ceo weighs in with whats next for nike. Its all coming up on the Halftime Report. Man 1 [ gasps ] man 1 he just got fired. Man 2 why . Man 1 network breach. Man 2 since when do they fire ceos for computer problems . Man 1 they got in through a vendor. Man 1 do you know how many vendors have access to our systems . Man 2 no. Man 1 hundreds, if you dont count the freelancers. Man 2 should i be worried . Man 1 you are the ceo. Its not just security. Its defense. Bae systems. Welcome back. We have the traders along side us as well. He is the chief market strategist. Take a look at the markets right now. You do have the dow jones at 17,420. Significant because it is only 5 points away to get to break even on the year. The s p is up by 7. Nasdaq is off by nearly 8 points. Lets get to our market debate of the day. That is offense versus defense. The winning trade so far in 2016 has been in the safety places and going back to december ive been holding on to gold and thats been nothing but up, up, up, up. Continues today. Gdx hit another 52 week high today. Also at fdx and we had unusual active in there. Nice move out of fed ex and i took that off. And i know that theyre not performing the way that we like but the financials are well above where he they were. Utilities are up 12 year to date and telecom 14. Financials are down 12 . Biotech down 7. Financials arent going to go anywhere right now. I think the markets can trend higher on the back of a lower dollar and until you approach the may period with concerns about the brexit and they presen themselves the energy names now oil above 40 works in your favor and now youre getting neutral. And thats after a 10 year to date loss. My cement trader came up with a great stat. You have a greater than 10 loss and you came back and make it up and lower dollar is a huge deal scott. This is going to be one of the things where everybody in the planet is thinking that oil prices is going to stay down and energy is going to be weak and the stronger dollar is going to continue to hamper earnings. Well, heres an interesting thought. What if the dollar is not down . What if the dollar is even stable from here and weaker against the emerging currencies. You can have a margin up tick and over the longterm while im looking for a bull back here, think about this. Chinas m1 year over year is ramping. The ecb is buying corporate debt and the u. S. Isnt tightening more than they would. If that doesnt figure out a growth move over the next 12 to 18 months im going to be wrong. Dow is positive on the year and keep an eye on that. Nearly 428 is where we are there. Do you buy this . Tow buy what tony is selling today . I think the market continues to move higher for all the reasons we have talked about. Energy prices healing themselves. And i think earnings are going to be okay in april and the guidance knowing that the dollar is lower, we will come out of the earnings recession. The dollar and the guidance about that is going to be favorable. So i think that earnings are going to be actually a catalyst to move the market higher. But i heard you say 3 to 5 drop near term. Right. A month ago. Ordinary reason my birthday february 11th, what a great birthday that was. The bulls eye bull. So everybody is taking more on recession. I dont believe fundamentally. I dont think everybody is thinking that. People were so thinking about recession and it doesnt invert and you shutdown lending anyways. Heres what i find difficult about your thesis. That your cautious because of 3 to 5 drop and high yield spreads have also come under control. And theres less worry. I think the mark can go higher. Even if you look at the senior financial cds index out of europe you get this great, you had a dramatic improvement. Regular Deutsche Bank is going to zero . Yeah. Well its not. Thats the last word. Great. The wide shot like thats it. Thats it. Yeah. So good to see you. That was only the first time that happened. Well see you soon. Coming up, fed ex soars after beating the street on earnings. How the desk is playing that stock today plus the battle for top trader rolls on. The halftime port foil wrfolio competition is heating up. And the brothers are making moves coming up next. We got another one. I have an orcogram for an owen. Thats me. You should hire stacy drew. She wants to change the world with you. She can program jet engines to talk and such. Her biggest weakness is she cares too much. Thank you. My friend really wants a job at ge. Mine too. Im a wise elf from a far off shire. And sanjay patel is who you should hire. Thank you. Seriously though, stacy went to a great school and shes really loyal. You should give her a shot. Sanjays a team player and uh. Frank abagnale. Convicted felon and con man. That was a long time ago. You know, they made a movie about it. You were shown to be quite skilled at fraud. Times change. Now i help catch the bad guys. Me too. I help banks detect fraud by applying cognitive analytics to public financial records and social media. So if somebody said, catch me if you can. . We can. Lets do a sequel. It could be a buddy movie. I would like to have a buddy. Implths the stock absolutely exploded to the upside. 11 jump. The company said that amazon which has been a big customer for years will continue to be a customer for years to come. That really pushed it not only up toward 160. And on that report. Okay. Caterpillar forecasts low sales and more than that. Its hedge funds. Lets look at it yesterday. Btu, one of the biggest customers and both cat and today they miss on every division. They missed every quarter except for one or two of the last four years and the stock is up. So clearly its Short Covering and thats where the pressure is going back. Thats where people swim with the sharks. And apple, this association with the cloud and its all about the cloud and everybody talks about it all the time. Take a look at microsoft as well. We have the big move and if youre executing and youre winning you look at growth. Recode is saying apple is using cloud. They announced the buy back joe. Another retail name. You have everyone jump on me like you did yesterday with gap stores. Is that what is going to happen . You make it a bullish case here . Ill tell you what, William Sonoma does not have a strategy in place. The situation, the need to turn