CNBC Exclusive: CNBC’s Jim Cramer Interviews Nelson Peltz and William Ackman from CNBC Institutional Investor Delivering Alpha Conference

WHEN: WEDNESDAY, JULY 15TH

WHERE: CNBC'S "Squawk Box"

Following is the unofficia ltranscript of a CNBC EXCLUSIVE interview with Nelson Peltz, Trian Fund Management, L.P. Founding Partner and CEO, and William Ackman, Pershing Square Capital Management LP Founder, CEO and Portfolio Manager, live from the CNBC Institutional Investor Delivering Alpha conference in New York City on Wednesday, July 15th. Following are links to the video of the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000397760, http://video.cnbc.com/gallery/?video=3000397719 and http://video.cnbc.com/gallery/?video=3000397720.

Mandatory credit: CNBC Institutional Investor Delivering Alpha conference.

JIM CRAMER: You bet. Thank you, Ty. Thank you, everyone. Nelson, Bill, we can waste no time.

NELSON PELTZ: Hug?

JIM CRAMER: It's supposed to be food. Where's the food fighting?

NELSON PELTZ: You ended last year with a hug, so we thought we would start.

JIM CRAMER: I think that's always fair. I know you gentlemen are accumulating positions. I know you're doing great things. I want to make it easy for you, so you don't necessarily are pigeonholed by me. But give me your single best idea, first Nelson and then Bill, that you are building a position right now that we don't know about.

NELSON PELTZ: I would say we have two new positions which account for 1/3 of our portfolio. Unannounced.

JIM CRAMER: Well, this is a such great opportunity to mention.

NELSON PELTZ: We're not ready yet, Jim. We're not ready. But we promise CNBC will be part of that knowledge when we're ready.

JIM CRAMER: Are they food? Are they industrial? Are they American?

NELSON PELTZ: One is industrial which we announced we had two industrials. One has been announced, Pentair which we're very excited about. The other one we have not categorized yet. We're going to leave it that way.

JIM CRAMER: All right, fair enough. Bill.

WILLIAM ACKMAN: We have announced, but no one has really noticed. Which is I think the most interesting investment we own today is probably Fannie Mae and Freddie Mac.

JIM CRAMER: Let's talk about that. Because there are people out here right now watching know there's a $2 stock, Fannie Mae common. A lot of people feel that the Treasury Department and government will never let that thing be worth anything. You obviously are making a statement that it's worth considerably more than $2 by saying what you did.

WILLIAM ACKMAN: For sure. It offers the most upside and probably has the most down side of anything we own.The down side outcome is very unlikely.

JIM CRAMER: Is it an AIG situation where you eventually win a court battle except this time it pays off?

WILLIAM ACKMAN: I think what's interesting about the AIG situation is we're not fighting the original deal with the government. Right. Hank, I give him enormous credit. He fought the government bailout. The government was the only money in town and terms were harsh. The terms were harsh for Fannie and Freddie. Three years -- four years after the crisis, the terms were changed again. The negotiation between the treasury and another agency of the U.S. Government.

JIM CRAMER: Right.

WILLIAM ACKMAN: I think that it doesn't get resolved in a legal outcome, possibly. I really encourage people to read the amici briefs, including one by a former FDIC chairman about the impact on the banking system if the so-called Fannie Mae third amendment is allowed to stand. I just think this cannot become a precedent where the U.S. Government can step in and unilaterally take 100% of the profits of a U.S. corporation forever.

JIM CRAMER: Fair enough.

WILLIAM ACKMAN: So I think that's going to work out well. But I think ultimately what will drive is not litigation, but the conclusion is Fannie and Freddie are really the only way to have a housing finance system in the U.S. with low-cost mortgages for middle-class borrowers.

JIM CRAMER: Let's talk about the state of activism and whether -- David Faber and I talk a lot, Nelson,about whether the defeat that you suffered at DuPont is the high watermark of actual corporate challenge and the Pentair is the new style of, listen, we want to work with you. You have always been a constructive activist. But the DuPont loss was a significant loss in a lot of people's mind because you had done a lot of work. The stock had run up to 80, largely on the strength of the fact that people felt you could get in and you could make things change.

NELSON PELTZ: It's been a significant loss to shareholders. Stock's gone from 80 when I was on your show March 12th. It was my wife's birthday that day. And the stock was 59 yesterday.And you can add $2 to that for Chemours. But it's been a loss for all shareholders.And we had 46 percent of the vote. And the activist index funds voted against us.

But we haven't sold our shares. That's not our style. And we're going to wait and watch and see what management and the board will do from here forward. And Ellen Coleman was in my office last week. And I said to her the second least favorite thing that I'd like to do is have another proxy fight. But the first least favorite thing I'd like to do is to see DuPont next year at this price.

JIM CRAMER: Would you buy more right here?

NELSON PELTZ: I would consider it, absolutely.

JIM CRAMER: Are you?

NELSON PELTZ: We're not discussing that.

JIM CRAMER: Would you buy Chemours here?

NELSON PELTZ: That's a good question. I don't know. We're doing work on Chemours. Think about that. That stock when issued a couple of weeks ago was 21 bucks.

JIM CRAMER: Right.

NELSON PELTZ: Yesterday, I think it was 12. They overleveraged the company. I mean we're accused of smash and grab. We're accused of overleveraging companies. Our white paper said spinoff Chemours, make it investment grade. They spun off Chemours. They made it junk. Okay. They promised a $1 dividend. The market clearly --

JIM CRAMER: It's 18 percent and there's no way that's going to happen.

NELSON PELTZ: That's correct.So the stock 21 to 12, 80 to 59. Think what might have happened had we won.

JIM CRAMER: Bill, let's say you were involved. And they didn't want you on the board and the shareholders voted against you, including the index. Would you take your bat and ball and go home? Do you just say, listen, there's still a lot here and I want to keep working?

WILLIAM ACKMAN: I think Nelson has handled this very well. And I think -- we were not a shareholder at DuPont. I think it seems much too personal a proxy contest.

If I ran a company, I would be delighted to have Nelson on my board. I really mean that. I think it's very,very helpful to a CEO to have a major shareholder on the board, so that you can get input from a shareholder before you -- you can test something internally.

JIM CRAMER: Were you surprised about the de Ligonnes, that they didn't want what were actually some pretty qualified candidates that Nelson put up?

WILLIAM ACKMAN: I was surprised by it, but the stock price is a short-term disappointment of the ownership of the business.

JIM CRAMER: Contrast that with Air Products where you took a very big stake. And I know you were not that happy with management. An old CEO goes out, a new CEO comes in. Does a remarkable job even in an environment where people didn't think the industrials were that good.

Is this the kind of activism you think is sometimes necessary when you take the position and the company is not as well run as you think?

WILLIAM ACKMAN: I think we have made a lot of money in cases where a great business has been run by a mediocre CEO over a period of time. I'm not commenting about Air Products. I don't want to pick on anyone in particular.

Maybe I'll pick on the former CEO of CP, his name is Mark for an example. You can put a great CEO into a great business, you can make a fortune. And if you can do that consensually, as we did in Air Products -- they gave us a couple of seats on the board. We picked a third director. One of the directors we put on was a guy named Seifi Ghasemi.

The board search the world and said, you know what, Seifi is the best guy, to their credit. They probably want to pick him because it was our idea initially. Ultimately they concluded he's the best guy. He's done a great job. He's been there only a few quarters at this point.

JIM CRAMER: Are you happy with Juan Ramon Alaix, who's done a good job I think at Zoetis.

WILLIAM ACKMAN: He's done a good job at Zoetis.

JIM CRAMER: Can he keep his job?

WILLIAM ACKMAN: That's up to the board. I'm not on that board.

JIM CRAMER: Are you happy with his work?

WILLIAM ACKMAN: I'm just getting to know him. So, look, I have to give him enormous credit. In a very short period of time, they have announced a major restructuring program that's going to make that a much more efficient company. I think it's a great business. He seems like a lovely guy. I just really haven't worked with him, so I don't know him well.

JIM CRAMER: When you guys --I know that you are friends, but I also know that you do different styles of work, but both of high quality. Have you ever felt, oh, I cannot believe that Nelson got that one? That was the one that I was working on the whole time and he beat me to it. Have you guys ever said, darn, that's the one that I know I could have done?

WILLIAM ACKMAN: Funny little story. We bought a stake in Cadbury a while back. We had never taken a stake in a U.K. company and had not been involved with the U.K. turnover rules and etc. We thought, you know, this is really down Nelson's power alley. So I went to pitch Nelson on Cadbury and working with us on it. He was fairly noncommittal,not particularly interested.

NELSON PELTZ: That was good.You brought in candy bars and soft drinks. And I'm easy to get that way with sweets and stuff like that. So Bill came in the office -- not to cut him off --with all these goodies. And we had already loaded up on the stock. We were loaded up on the stock.

WILLIAM ACKMAN: He plays pretty good poker. So I left the meeting thinking, hmmm. Then he shortly thereafter announced involvement in the company. We just rode his coattails.

JIM CRAMER: Did you like his work in Wendy's and felt that Burger King quick serve is the place to be? Or just happened to be you both like quick serve businesses?

WILLIAM ACKMAN: Actually Nelson is probably one of the few activists where we crossed over a couple of things. Actually the story on Wendy's is sort of similar, but a bit in reverse.We had a take in stake in Wendy's. Nelson was actually forming his partnership and six months later bought a stake and was very helpful.

I think we have known each other now 10 years. And I think we like high-quality businesses. And we like high-quality management teams. And I think we like to work constructively with management. But occasionally when you get the Heisman, I guess you'd call it,it's important to give the owners a chance to make a decision.

NELSON PELTZ: Wendy's is a very interesting example. That was the first stock we ever bought when we started our fund. We bought that stock in November 10 years ago.

Okay. And when you talk about activists and they talk about the fact that we're short-term, they talk about that we want to leverage up, they talk about all this stuff. And we're still in Wendy's stock. We're still in Wendy's stock 10 years later. And what really troubles me is all the mud slinging that goes on to activists. They want to say that we're green mailers. They want to say that we're the raiders of the '80s. It's not true.

JIM CRAMER: Weren't you a raider of the '80s?

NELSON PELTZ: I never was a raider. I did an unsolicited of National Can. That worked out pretty well.Okay. And we never had a lawsuit about it. Management stayed. It remained a public company. The CEO of National Can stayed on after we bought the company.And they put, by the way, very interestingly on the front page of -- they had a tender offer going at the same time, a partial tender offer. And they said on the front page of their document if anybody came in for 100 percent of the stock, all cash at a higher price, they would deal with them, so we took them at their word.

JIM CRAMER: I mean you clearly --

NELSON PELTZ: We had done it before.

JIM CRAMER: Let's talk about a proxy fight where you won. Heinz. You come in, and you discover what? That there were people who weren't necessarily doing what they wanted? That you weren't happy? First let's say Ingersoll where you come in and say, gees, this guy is pretty good.

NELSON PELTZ: No, I'll tell you. At Heinz, which was really fascinating -- I love the company. I love the brands. I didn't know management very well. Like most management, the knee-jerk reaction was to keep the activist out. But we had a prescription for help that didn't include breaking up the company, that didn't include making it anything but an investment grade.

Just saying let's spend more money on marketing and let's give out less discounts to retailers, create bull versus bear for the product. It worked.

And I'm very proud of the fact that Bill Johnson, the guy we had the proxy fight with, is on our advisory board today. And he's our designee on the Pepsi board.

JIM CRAMER: So far he's got to like they had the best consumer products growth story, the best organic growth. They had double-digit earnings. A lot of these other companies,Coca-Cola, a competitor, won't. He must feel that maybe that model is not as bad as one thought initially.

NELSON PELTZ: I didn't have a problem with the model. I had an overarching problem with the fact that I felt their expenses were too high. And I think Pepsi is doing a wonderful job. I think Pepsi has positioned themselves that they will meet or beat earnings every quarter from here on in which will make all shareholders happy. Nothing wrong with that.

JIM CRAMER: No.

NELSON PELTZ: But I think they could probably do more.

JIM CRAMER: All right, fair enough. Bill, you've got a couple of things -- another way to go, you have a vehicle. Howard Hughes that I think seems like a fabulous opportunity. You have platform specialty. Happen to have them on "Mad Money" tonight. Just really think they are terrific. A blind check company that's done well.

Do you like the vehicle method? Do you like this where you've got a couple of shares that you're on the board? Which is the activist model that works? Or do you just kind of feel it's multi-discipline?

WILLIAM ACKMAN: I think we do two principal things. We focus on very large companies that are under managed where we think we can be helpful. Kennedy Pacific, Air Products and businesses like that. We have also built some companies.

Howard Hughes I'm proud of because this was a business that didn't exist. The general growth restructuring, we took 34 assets out of the company. We stuck them in a shell.We spun them off the shareholders, recruited the management team and board of directors, and took a bunch of development assets that the company had made no progress on in 10 years and built a real business. Stock is I think up fourfold, maybe more than fourfold since the spin-off. That's been a very good experience for us, backing a very talented team with cash or a sort of minimal collection of assets.

We have done the same thing with Platform. Platform is really Martin Franklin's vehicle. It's a company at this point. It's a 10 billion plus, you know, specialty chemical company. And,you know, usually we find the great business with weak management.

But finding the great management without a business and backing them and building a company -- what's interesting is if you look at our portfolio, almost everything we own today is what I would call a platform company. So there's value in pharmaceuticals where you have a great collection of assets but a CEO with a track record of very disciplined allocation of capital, great deal maker and a great operator.

NELSON PELTZ: I commend Bill for his Platforms. I think it's a great way to do business. We did that in the'80s. When you don't have much money, you buy vehicles and you do what you've gotta do. And that's how we created American National Can, Uniroyal Chemical. It's a wonderful way to do things. We'd like to hope that Pentair will be something like that at that point if they can roll up more businesses in their industry.

They did a great job with Tyco, taking it in and getting a lot of costs out. We think they can do it again, their tax advantage being based in Ireland.

So I think Bill has done a great job doing that. And I think it's a wonderful model. It's time-tested.

JIM CRAMER: Let's talk about the notion of constructive activism versus people feel they don't need to necessarily vote for what might be a good thing for shareholders. DuPont, the stock empirically showed that if you went with Nelson, it was going to go higher. And the moment that Nelson lost, it's pretty clear it went lower. That's pretty much what happened.

There were people who I believe, very smart people, who are even at this conference who believed in you and knew that what your plan might have raised the stock price. Help me vote.

NELSON PELTZ: Well, you know what's interesting, Jim, we got, as I said, 46 percent of the vote. And virtually every active manager, virtually every pension plan with very rare exception, almost every mutual fund voted for us. They had to mathematically because when the three index funds and retail vote against you, you better get a lot of votes from the other parties. And we did.

My question to you is that if the election were held today, what do you think the results would be? Okay. So that's one of the reasons why we're sticking around.

Look, we want management and the board to do a good job. It's not -- we'd rather be rich than right. Okay.If the stock goes to 100 where we think it should be in a couple of years under our plan, we are thrilled whether we are on the board or not. But if it's not, then we have got to look at all our options again.

And I question whether those no votes for us would be no votes again given where the pro forma has gone.

JIM CRAMER: Do index funds have a brain? Are they allowed to not have a brain?

WILLIAM ACKMAN: Look, I think actually I have good experience generally with index funds. And I don't know enough as to why they chose to vote against Nelson in that case.

The Vanguard board invited me to meet the directors a month, six weeks ago. They are clearly very interested in being other than a passive investor. I think they are generally pretty thoughtful.

We talked briefly about the DuPont situation. I think it's a bit of an anomaly. I think that -- if I have to say the biggest mistake Nelson made, he waited too long. It's not easy tow in a proxy contest after the stock is up. How much was the stock up?

NELSON PELTZ: You're 100 percent right. We bought the stock high 40s, 50s. And the stock went up to 80.And they are pounding their chest on TSR, that TSR was all occurred from when we got in the stock. But they were taking credit for it. Now they have got to take credit for it again.

JIM CRAMER: Wait. Are there areas that are just off-limits for you guys? I never see you coming in on a tech company. Even though there are tech companies that are loaded with cash.It would seem like the managements aren't that strong. Just something you don't want to do?

WILLIAM ACKMAN: When you put 10 percent, 15 percent, 20 percent of your assets into a business, you want an incredibly robust stable predictable business. The problem with technology is most technology companies are too dynamic. I mean you wake up and there's a couple of guys in the garage a block from Stanford University, a couple of women in a garage and they are starting a new business that's disruptive.

And I think if you look at the kind of businesses that I think both of us like, we like businesses that can withstand the test of time, technology, commodity. I try to stay away from things where an extrinsic factor I cannot control, commodity factors, interest rates.

NELSON PELTZ: We like businesses -- that I think sort of speaks to Bill as well -- that sort of have moats around them. Okay. And technology is one that isn't.

We have three verticals that we like. Everything consumer, financials that we call, financials without balance sheets because we don't understand them. And then industrials backslash chemicals. Businesses that we have been in in our career, operate in those businesses.

JIM CRAMER: Have you ever got into one and you just said, oh, man, this is a loser, I've got to dump it and we don't even know about it? Somewhere you took a 3 or 4 percent stake.

NELSON PELTZ: Not since we have been running the firm. But historically, yeah, I have gotten into some I wish I hadn't been there.

JIM CRAMER: Can you share it with us?

NELSON PELTZ: I'd rather not, you know.

There was a property company in the U.K. which I thought the world was lined up absolutely positive for what we wanted to do into the '80s and early '90s. And the first Gulf war broke out.We were buying it under what was called NAV. And we got NAV'd.

JIM CRAMER: Got it. Bill, youhave a new one, Nomad, that we should talk about. I love the food business. I think this is fantastic. This is frozen food. They don't own Pinnacle which I think would be a great acquisition for them. Nomad has got this great management team again. That industry is still ripe for consolidation.

Are you thinking big Nomad or is it going to be more like a B&G Foods where you build it up as little businesses that Kraft might sell? Is this the next Kraft Heinz or is this the company that will slowly methodically make a lot of money?

WILLIAM ACKMAN: I think it's going to be a pretty dynamic business. Again we share the same executive share with Platform, Martin Franklin.

JIM CRAMER: Martin Franklin.We all know Martin from Jordan, one of the greatest investors. Not promotional. Don't know it, but Jordan has been an amazing company.

NELSON PELTZ: I agree.

JIM CRAMER: Can Nomad be that for Jordan? Nomad could own many aisles of the food business.

WILLIAM ACKMAN: One question,it benefits by, one, it's small, so there's a lot of potential. Two, it's a non-U.S. domiciled company so it's got territorial tax system, a lower tax rate. Plus there's a lot of dynamic things happening. You look at Heinz Kraft.

JIM CRAMER: That's what I'm thinking.

WILLIAM ACKMAN: A lot of assets need to be sold. This is a company that could be a very logical buyer. And we have one of the best deal maker operators as our leading shark. So it's going to be a good story.

JIM CRAMER: Wendy's has been fabulous. Quick Serve has been fabulous. Could either of you fix McDonald's, or is it too hard?

NELSON PELTZ: Well, I'm chairman of Wendy's, so I don't want to give them too many tips one what needs to be done.

If I wasn't in Wendy's, if I wasn't in Wendy's and didn't have a strong feeling for management and the board, McDonald's might be a place we would go.

JIM CRAMER: You would?

NELSON PELTZ: Yeah.

JIM CRAMER: Why? Because balance sheet and name brand and nameplate?

NELSON PELTZ: I think it's balance sheet clearly, and huge amounts of points of distribution. But the culture and the mindset at that company has to be turned upside down. And I don't know if they have the stomach to do it because it's going to take a lot of quarters or maybe a lot of years to get that thing righted. And I don't know that shareholders are going to be patient enough.

WILLIAM ACKMAN: So if you look back 10 years ago, we went to McDonald's and said you should adopt a model of refranchising all your stores. You should keep it a small test group of stores. And you should, you know -- that's how you should run your business. And they sort of turned us down, but they took some steps in that direction.

And then about five years ago, the folks at 3G called me up and said, Bill, we're going to take Burger King private. We'd love you to participate with us. By the way, we're going to take your plan from McDonald's and we're actually going to implement it.

Now, Burger King was in a much worse place than McDonald's is today. A store base that's disaster. You had same-store sales that had gone down every year. They had had 13 CEOs I think in the 25 previous years.

But it was in, I don't know, 60, 70 countries. And the best businesses are ones where if they have been run poorly and had 13 CEOs in 25 years and they still exist, that tells you something.

In a very short period of time -- now 3G I think took the business. I think it was 2010. So in five years, they have taken Burger King from worst. It's on its way to being best in this space. Nelson.

NELSON PELTZ: Come on.

JIM CRAMER: I mean the guy is like 25, he's fabulous.

NELSON PELTZ: Bill is right.

WILLIAM ACKMAN: Nelson is still in one country so he has a long way to go with Wendy's.

NELSON PELTZ: What we have done is adopted that model as well. We'll be down to roughly 300 stores.

JIM CRAMER: You also did let some go in stock.

NELSON PELTZ: What we did do, Jim, as Wendy's is we held back the real estate. So we have a royalty stream and we have a rental income.

WILLIAM ACKMAN: As does Burger King.

JIM CRAMER: Do you guys like the notion of the retail model, say a Dardenne where you do a lease back and financial engineering? Do those things work for you?

WILLIAM ACKMAN: I'm not a fan. Interestingly, I come from the real estate business. But I don't like if you own -- if you are going to be in the business a long period of time, you want to control your real estate assets, as a retailer I believe and as a real estate company.

JIM CRAMER: How about if you are Sears? Which I know you know. It doesn't seem like there's much way out.

WILLIAM ACKMAN: Sears I think is a tough one. I still think there's a lot of asset value. Maybe not left in Sears Roebuck & Company. But Eddie has taken a lot of the assets out of that business. But if you burn up a billion or $2 billion a year in operations,you can work through a big percentage of the value of your company over 10 years. That's a tough one.

JIM CRAMER: I want you each to name me an offer that you absolutely love and you were never go after to emulate. Just think gees, these are the guys you go into the boardroom and say, you know what, you have got to be like Howard Schultz at Starbucks or you've got to take a look at what Mark Parker is doing at Nike.

Who are the guys you respect?

NELSON PELTZ: I think the guy running Honeywell --

JIM CRAMER: Dave Cote.

NELSON PELTZ: Yeah.

JIM CRAMER: Have a quarter on Friday. I'll bet he makes.

NELSON PELTZ: Yeah, he knows how to run a conglomerate.

JIM CRAMER: Yes, he does.

NELSON PELTZ: There aren't a lot of conglomerates out there we agree with. That's one that we do. They have proven their metal, that they can run these diverse businesses. They know when to get out of them. Then know when to get in them and they do a great job. You have to earn the right to be a conglomerate, and they have.

JIM CRAMER: How about Sandy Cutler.

NELSON PELTZ: Sandy Cutler should not be the lead director at DuPont.

JIM CRAMER: Fair enough.

NELSON PELTZ: I don't believe the lead director at any company should be a sitting CEO.

JIM CRAMER: Interesting. How about someone you like?

WILLIAM ACKMAN: I actually don't know the new management team at Danaher, but I have followed what that company has done over a period of time.

JIM CRAMER: Very smart.

WILLIAM ACKMAN: Incredible business, amazing job.

JIM CRAMER: I just want to go back to Fannie Mae. When you hear something like a Fannie Mae $2 stock, do you say, listen, it's just the government and I don't want to master it, or is this intrigue?

NELSON PELTZ: No, Bill shines in those kinds of things. That's not an area that we feel comfortable in. We like brands. We like franchises that we understand.

WILLIAM ACKMAN: I had a meeting with an investor once, a big institution in the U.K. And I described our investment and general growth, when the stock was 50 cents and what the whole story is. He called it the sex and violence part of our portfolio.

Fannie Mae is in the sex and violence part.

JIM CRAMER: Which is the favorite stock -- which is your favorite stock in his portfolio? Which is your favorite stock in his portfolio?

WILLIAM ACKMAN: I don't know.What do you got?

NELSON PELTZ: I'm going to take Fannie Mae because I know nothing about it, but I've got great confidence in Bill.

JIM CRAMER: All right, fair enough. What about his?

WILLIAM ACKMAN: What do I like?

NELSON PELTZ: You've got to like DuPont.

WILLIAM A. ACKMAN: I like it in this price versus the price --

JIM CRAMER: Just in general, economy for you guys? There's nothing that is -- you're not going to do anything different off of what China is doing right now or what Europe is doing now?

NELSON PELTZ: No.

JIM CRAMER: These are not issue for your business.

WILLIAM ACKMAN: My macrofocus is to find the business you don't have to worry about what's going on in Greece. I think China is a bigger global threat by far. You know, I think the-- I call it the rigging upward of the Chinese stock market is a fairly remarkable phenomenon, and I think kind of a frightening one.

You look at the Chinese financial system. You look at shadow banking. You look at the amount of leverage. You look at how desperately they have worked to get their stock market up. I mean if it doesn't look like -- it looks worse to me than 2007 in the United States. Much worse.

JIM CRAMER: Would you invest in any companies that have a big exposure? Or would you think about that for a target? That company does too much business in China, I'm concerned.

WILLIAM ACKMAN: I would worry about it, for sure. I think it's a total lack of transparency. And when then put out a GDP number of 7 percent, does anyone have any confidence that's the right number?

JIM CRAMER: None.

NELSON PELTZ: I think there's a big consumer opportunity in China. I think companies like Mondelez are taking advantage of it. And no matter where the market goes in China, people are going to be eating more and more Oreos in China, and that makes me feel good.

But on the other area, capital items and things like that, I would be concerned about in China.

WILLIAM ACKMAN: Look,long-term, I think it's a great story. In the shorter intermediate term, you have to be somewhat concerned about the nature of that financial system.

JIM CRAMER: Well, gentlemen, I want to thank you. Very candid. I have to tell you that I want everyone thinking about the Fannie Mae, you've got to do your homework. Because it's been $2 stock and I know it's been a wild trader. I don't want to do anything that will necessarily hurt people.

WILLIAM ACKMAN: There's risk.

JIM CRAMER: I hope when we find out which is the big one, that we find out on CNBC. That if there's another one away from that. And I know from the piece in the "Barron's" last weekend there's one more that we will hear about it.

NELSON PELTZ: There are two more.

JIM CRAMER: There are two more. I hope we hear about them on "Squawk on the Street" or "Mad Money," whatever. I have learned a lot, things that we can go make some money with it. Thank you.

JIM CRAMER: Thank you, Bill. Good to see you.

About CNBC:

With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, CNBC World and CNBC HD , CNBC is the recognized world leader in business news and provides real-time financial market coverage and business information to approximately 371 million homes worldwide, including more than 100 million households in the United States and Canada. CNBC also provides daily business updates to 400 million households across China. The network's 15 live hours a day of business programming in North America (weekdays from 4:00 a.m. - 7:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide. CNBC at night features a mix of new reality programming, CNBC's highly successful series produced exclusively for CNBC and a number of distinctive in-house documentaries.

CNBC also has a vast portfolio of digital products which deliver real-time financial market news and information across a variety of platforms. These include CNBC.com, the online destination for global business; CNBC PRO, the premium, integrated desktop/mobile service that provides real-time global market data and live access to CNBC global programming; and a suite of CNBC Mobile products including the CNBC Real-Time iPhone and iPad Apps.

Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://www.nbcumv.com/mediavillage/networks/cnbc/.