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Pershing's Ackman: Lehman In a 'Tough Spot'

CNBC.com
Wednesday, 10 Sep 2008 | 10:00 AM ET

Hedge fund manager William Ackman appeared on CNBC and reacted to the some of the top news stories this week, including the government's decision to takeover mortgage lenders Fannie Mae and Freddie Mac and Lehman Brothers Holdings'decision to report its earnings results and strategic plans earlier than scheduled.

Ackman on the GSE Bailout
Perspectives on Lehman, Fannie & Freddie, with Bill Ackman, Pershing Square Capital Management managing principal

Lehman Is Different From Bear Stearns

"They're in a tough spot...we bought puts on Lehman almost as a market hedge than a bet against Lehman. If Lehman goes, I think it's bad for the markets generally....The Bear Stearns' restructuring and Fannie Mae bailout kind of shows that the country doesn't want to let big financial institutions fail in a way that's destructive from a systemic risk point of view....Right now, they're [Lehman] in the position of burning furniture to keep the house warm."

--William Ackman, Pershing Square Capital Management, Managing Partner

On Paulson and the Bailout of Fannie and Freddie

"The first thing he did right was, he didn't rely on the gap financial statements of Fannie Mae and Freddie Mac to determine whether the institutions were solvent. The second thing he did right is, he didn't rely on even their regulators' estimation of whether they were solvent or not."

--William Ackman, Pershing Square Capital Management, Managing Partner

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  • For More on Ackman's Thoughts on Fannie and Freddie, Click Here

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Big Bets
Looking back on big bets, with Bill Ackman, Pershing Square Capital Management

Ackman On His Latest Bets

"I very rarely like to make stock recommendations, but...I'll point out an 'interesting opportunity: Long's Drugs. Long's Drugs is trading at a nickel above a cash tender offer that CVS is holding open to acquire the company. Under the terms of the deal, the tender offer has to remain open until August 2009, or they get a two-thirds tender from the people who own the stock. The company can continue to pay a 14-cent dividend so you are getting paid to wait."

--William Ackman, Pershing Square Capital Management, Managing Partner

Pimco's Gross Praises GSE Takeover
The head of the world's largest bond fun backs the government's bailout of Fannie/Freddie, with Bill Gross, Pimco founder; Nouriel Roubini, RGEMonitor.com and Bill Ackman, Pershing Square Capital Management

Gross On GSE Takeover

"There are additional steps that are probably going to have to be taken. Almost all asset markets - stocks, real estate, commodities, corporate bonds - have a common theme: They're delevering, and having used that as the basis for marginal profitability over the past several decades, a cautionary, or in many cases, forced delevering moves asset prices down instead of up, and what has to take place now is, certainly, a recapitalization of the banking system. Banks are not in a position to sell lots of common stock, or to sell preferred stock. There may be another policy move required going forward."

--Bill Gross, PIMCO Founder & Chief Investment Officer

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