Until he got on the board that he tried to leave the company in a position to recover starting with securing that Financing Deal last week. He told me he thinks they have excellent management and now an excellent board and that the investment was simply taking too much time that if shares could double t wouldnt move the needle enough to remain in the stock. Our josh brown was up tweeting about what he called the valeant depockal. What do you make of this story as we watch it unfold . Anyone who runs money will tell you the market gods do not like it when other traders take joy in the pain or the misery of someone who has just blown up or had a bad trade. I feel people who are in it and im sure they will be fine and it is a really, really bad loss. It is a debacle of a stock. It has been for some time, but, obviously, thats accelerated. Some will say as we look at this and ackman told me yesterday he didnt understand the issues at valeant and others say the writing was on the wall and if you simply listen to jims own point of view over the years and remember ackman himself had a look at his Research Back in 2014. It was sent over to him. He read the whole thing. And he basically said chanos didnt know what he was talking about on valeant. Lets listen and react on the other side. He sent me his 26page analysis of the company. I went through every word. I had inside access and, unfortunately, jim does not have valeant right. Look, hindsight is 20 20, obviously. When you listen to that and i went through his research again today just before the show and he laid out pretty clearly what he thought was going to happen to this company. Too many deals at too big of a price. Too much leverage and here we are. Right. So, first, if you ever see me on the other side of a jim chanos trade, make sure to throw a pail of water at me. A couple quick things. The first is, ackman was not alone. This is one of the most crowded Hedge Fund Hotels that really anyone has ever seen. You had at least two or three dozen major funds involved in this stock on and off going back to 2014. Because it was a moneymaker. It was working. The second and by the way, not just hedge funds. Sec sequoia was in this. The only hedge fund anointed by warren buffett. This is not fly by night some shady thing that only one person was involved in. You had a lot of time as an investor to get out of this. This is not the same as longterm Capital Management which blew up, i think they lost 4. 6 billion in less than a couple of months. And that was against the backdrop of a collapse in russia and asia. Nothing like that was going on here. You had years to decide this is probably not going to be the next berkshire hathaway, which is what ackman once said. He said a platform could be worth 330,000 a share. The whole way down you had ample opportunity to second and guess that thesis. So, i think, you look at 9 billion at and you look at longterm Capital Management and those were very sudden. This was not. Josh, appreciate you coming to the phone. Well talk to you soon. Yep, talk to you later. Josh brown. Bill ackman has been on cnbc many times over the years talking about his investments. Heres just some of what he said. When you understand the operating fulosia philosophy an into the mold of an investment. Thats what got us interested in valeant. This is not a good thing on your resume. Id go find another job. I think the best name Management Team under famed railroader. This is his third turn around. The most profitable railroad in north america and hes done an incredible job in a very short period of time. Burger king was far, far behind mcdonalds call it four years ago when 3g bought the company. Or 4 1 2 years ago and now theyre making enormous, enormous profits and mcdonalds is playing to catch up and just shows you the power of a talented Management Team. Leslie picker has been looking at ackman stock picking history and big hits and big misses. With valeant people look at a deja vu and those losses were about a tenth the size of the ones he is taking on on valeant and change management that didnt go as well as planned. But from there he moved on. And a lot of people point to some of the winners right after he moved on from jcpenney, namely canadian pacific. Thats a stake that he exited this year. 2. 2 billion that he had made allergan. As you say, look, we lay out the good, the bad and the ugly. And over the years there has been much good, right . I mean, i just made a list. Mcdonalds, wendys, tim hortons, general growth and mbia, a long saga that paid off incredibly well and allergan and canadian pacific. And the mow more recent issues that have people focused on that side of the ledger and clouds the overall picture for some. Thats what you get with an investment like bill ackman who takes these extremely concentrated bets. Youll have these high rewards and then the, of course, valeant situations with the big losses. In recent years, youve seen incredible losses and net returns on his portfolio. But in 2014, you did have that big 40 gain largely from when allergan sold itself way back when he posted a 2. 6 billion gain on that. But its hard not to forget the losses especially in times like these when you look at how the s p 500 is performing relative to his good years. With us for the hour, john and pete are here, Carrie Firestone is here and Courtney Gibson is the president of luke capital and with us today, as well, from chicago. Doc, you just emailed me something. Tell the viewers what you just told me. Sure. Obviously, im just like josh, im not going to rip on ackman. I feel bad for him and bad for the investors. When you define your bet as much as leslie described as ackman does routinely, you need to have some sort of floor under that bet. A lot of people do it exactly with the products behind me. With an option and an insurance policy. If you dont do that and you ahave a really concentrated bet, obviously, you can make a lot, but you can lose a lot really fast. Look at our friend carl icahn. Carl basically buys upside calls and he did this in urbal life judge, as you recall. He brought upside calls and thats exactly the opposite of what im talking about, of course, because thats really ramping up the amount of risk you want to take, rather than cutting it. So, carl does that because hes somebody very smart, but also hes willing to accept the consequences of being wrong and seeing that trade go against him. Mr. Ackman probably could have hedged and lost 5 or 10 on this trade, rather than 95 and that would have been a much smarter trade. But its hindsight at this point. Carrie, for those managing their own money and own portfolios and many viewers do that for them selves. We had conversations as to whether people are better off managing their own money than putting it with somebody else who may not perform as well. This really is a lesson in not only risk, but emotion when it comes to trading. A stock that was up at 263 and now it comes all the way down to 11 with an investor falling so far in love with a companys model and its ceo and here we find ourselves. Well, you know, its easy, of course, to take shots at bill ackman because of this trade. I apologize for my voice. Its the blizzard outside. But, remember, this is one trade among many and he has made a lot of money for his investors who are sophisticated investors. The average person doesnt take 10,000 from their 401 k plan and give it to purshing square. That is not happening. These are people who have a lot of money and institutions that are deciding to allocate some to a person with lots of experience. Sure. But let me just stop you there. Whether you have 20 invested in a stock or, you know, 2 billion or whatever, the lessons are the same. It doesnt matter who is investing in what fund when, where and how. Totally. I was just putting the backdrop in place. He made a bet that was too big. He did not if you asked him, he would say, i bet too much. I went overboard. I fell in love with it and he recognizes that. This must be a terrible situation for him. And he took the risk in a way that he shouldnt. He was too oversized. I wrote a book about risk taking and i wish i hadnt done it for his investors and for himself. We never owned valeant but we made plenty of mistakes. We just try to size it correctly. Courtney, do you pick up on that. The lesson for the investor here or the money manager for that level is what . Be discipline. At the end of the day we can all sit here and as everyone said very invested investors. People take risks, they take calculated risks. I think it was calculated. He is very, very sharp investor at the end of the day. But like you said, people do fall in love with names and stocks and at a certain point you have to be disciplined and you have to say, this is what my ce sell signal is and this is what my buy signal is. At the end of the day the one lesson here is being disciplined and knowing when to cut your losses. This is 20 20 hindsight. At the end of the day, people do this, you make mistakes and hopefully you learn from them and as someone very bright told me once, ive gone to that school, learned that lesson and i dont plan to pay tuition twice. Wonder as you move forward it sort of changes the overall dynamic of the way hedge funds operate and josh brown made the point of valeant was a Hedge Fund Hotel among, if there ever was one. And whether this sort of changes that whole feeling. I mean, the blow up in valeant caused deep pain for the industry, give an number of names that were in it. And theyre still experiencing the as you see activist investors pile into certain names. Do the mistakes of certain activists and all the decisions and influence they have over management, do they spill over and do you get this group think mentality that is not good for the stock at the end of the day. Pete, how do you view this . Scott, we talk all the time about discipline. I heard that word used multiple times by the panel so far. Lets be honest here. When you look and youre analyzing where you are going to allocate your money, you have to know exactly what that fund is going to be doing. For instance, part of what we do back here in minneapolis is 5 allocation is the biggest that we will go. So, as long as people understand that the concentration levels and a lot of people fall in love. It was brought up 2014. A 40 return. People fall in love with that return. What they dont fall in love with is when they see the other side of returns like in this valeant case where its 90 to the down side. The concentration amount is really the problem here. And youve got to know exactly how people are allocating the money when you put money into a fund. As long as you understand that, you understand the risks. You have to understand there is the highs and the lows. By the way, you never marry a stock. Im married to my wife. Theres not a stock, including apple, as much as i like it. Not a stock that im married to. If something changes. If the story changes, if something within it fundamentally changes, youve got to change with that and that did not happen in this particular trade. Yeah, leslie, good having you today. Thanks for joining us. What all this means for bill ackman and what it means for valeant itself. Lets bring in the analyst who called the sharp fall. David maris. Welcome back. Nice to talk to you today. Good afternoon. What is your big take away . What does this mean for valeant itself . I have to disagree with some of your speakers before that there has to be restraint and also responsibility. If you own a lot of stock. Its one thing. One thing to go on every tv show and tout it to people as this is why you should own it, also. So, i think thats where people should have been a little bit more responsible. Where does valeant go. An insider on the board is leaving. Ask you to wonder, does he know something about the outlook . Does he have a perspective on what near term investigations are going on and the market is reading it right. Someone who is closer to this than anyone can be is walking away. And its probably not a good sign. He made the point to me yesterday, david, on the phone that, look, valeant can double from here. Not out of the realm of possibility. Just not worth our time any more. Is he wrong in believing that valeant from this very low level can right the ship now that it has the financing in place to recover to some degree . Look, i cant speak for whether hes truthful or not. I know thats probably what most people scripted would say. What should you say when youre leaving . I think it could double, but im leaving. The fact is if you think its going to double, even if its a small amount of time. Dont spend any time on it and just sit on it. So, at what level, though, would you recommend people buy this stock or how much lower do you think it could possibly go. Were talking about a stock that is under 11. Since november of last year the fair value based on what we can see is anywhere between 10 and 1. You want to buy it at a discount to that. Give on the last quarter that they reported, you probably want a pretty big margin of safety. We also have been saying that we think there is a greater than 50 chance that at some point they enter a restructuring. The recent Debt Offering kicks that down the road a couple of years. But, look, the outlook is bad and the base business and some of the key products, the prescription trends do not look good. So even after the ackman goes away and all the other dies down, you still have a base business that is not performing well. David, let me ask you before you go and put this in the big picture perspective. A stock that goes from 263 at its high to 11. I gather youve never seen anything like this in your career. Im just curious about your thoughts of how this whole thing has unfolded. I had two other big short calls. This one is the same exact thing. Its a big, fat pitch. It was easy to see if you spent time with management and dug through the numbers. In my opinion, people just didnt have the courage to call it for what it was and, to me, this was a big fat pitch down the middle. Its amazing when you say that and you realize the ackmans and the bill millers and the value act who had board representation and some of the smartest money or perceived smartest money around missed it. But, its not that surprising, right . Were all people and we all make mistakes and get tied to our own stories of why we like something and why we dont like something. But, again, you have to be the best dispassionately and then they set limits and then they say, you know, when this hits, when this news happens, im not going to change my thesis. Im going to stick to it. Do i really own this because mike piersons a great guy . If i do and he leaves, then i should sell it. If you dont keep that discipline, thats where you start to get into trouble. Well, david, we appreciate your time. Well talk to you soon. Thank you. Leslie, thanks for being here, as well. Tomorrow on the Halftime Report we want to remind you, as well. An exclusive interview with the bond king jeffrey gundlach. Well discuss the fed, the market, so much more, as well. Up next, free agent banking mike mayo. Today its a pie. A pi symbol on it. You know what today is, march 14th, 3. 14. We get it. Well talk more about the bank trade with mr. Mayo, when we come back. Im ricardo, a sales and Service Consultant here at the xfinity store in bellevue, washington. Here at the store, we offer internet, tv, phone, customer service, home security. Every situation is a little different. It could be about billing, simple questions like changing the phone number. Sometimes, they want to upgrade, downgrade, but at the end of the day, you want to take care of the customer. One of the great things about comcast, theres always room to move up. Of course, it depends on you, how hard you work. Welcome back to Halftime Report. A picture of where the market stands. The dow down 57 points. S p, nasdaq down 0. 5 . Vic vics at its highest level and break below the 50day moving average, too. Thats what people are certainly watching today on wall street. Theyre always watching the financials, as you know, especially in this kind of market that we had. Free agent banking analyst mike mayo joining us now. Nice to see you, again. Thanks for having me. When are we going to stop saying free agent . Soon . I hope so. Two weeks of being unemployed and i think my wife is ready for me to go back and get a fulltime job. Is. Were hopeful for you, as well. I should certainly say that. Whats with the pie . Lets just cut right to the chase. When you talk about jpmorgan owning bank stocks is as easy as pi, pi. The margin is 3. 14. This has been the biggest decline in that interest margin in 70 years. This decade, the Net Interest Margin is down onefifth and its turning and more Interest Rates make a difference. If we get two or three Interest Rates were going to fix your microphone real quick. You were so enamored with the pie, your microphone fell off. The financials have had such a great run. Right. We thought the regulations were going to come off. Dodd frank was maybe going to be rolled back to some extent and, obviously, with rates. But pick up the thought that you had before that you were making. The 3. 14 being the Net Interest Margin for banks to really make money. Its 3. 14. Declined by about onefifth this decade. That is the biggest decline in 70 years and its turning. Higher Interest Rates will turn the Net Interest Margin. Two more rate hikes this year, thats fantastic. Were looking for more than three rate hikes. Maybe 3. 14 rate hikes. But even without rate hikes, you have accelrerating revenue growh and the strongest Balance Sheet in a generation. Thats a unique combination. Would you sell any banks here given the rally or add to the group. To you and others it is a fair question. Look at the rally since President Trump got elected. I go down the list. Xlf is up 23 . I could go down even individual name which is more impressive than that. Morgan stanley at 35 and the other, bank of america is up 47 . How can you not ask that question. I think its a fair question. I will concede a speed bump with the trump bump. In other words, a lot of investors are owning the bank stocks for the possibility of the big tax reduction, even higher Interest Rate increases. The Infrastructure Investment and likelihood something doesnt go right. I look at it over the last 1