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Ackman Says ‘Hard to Lose Money in P&G’ – Is He Right?

Ever since billionaire investor Bill Ackman revealed a stake in P&G earlier in the month, pros have been trying to figure out what he sees.

Ackman is famed for his ability to spot value, but at a 20 multiple many pros aren’t quite sure what Ackman sees in this steady-eddy stock.

Well he must see something. “We have about $1.8 billion invested in P&G,” reveals Ackman at CNBC's Delivering Alpha event. “It’s hard to lose money in P&G at the current share price.”

That's pretty compelling - hard to lose money at current levels. Should you follow him in?

All the Fast traders agree that Ackman’s stake is a bet that the stock has upside. “I have to assume it’s a beta play,” says Guy Adami, managing director of stockMONSTER.com.

“He has to think he can get them to expand margins and perhaps sell brands in the portfolio that don’t fit,” adds Karen Finerman, president of Metropolitan Capital.

“When I establish a position I often look down before I look up,” Finerman adds. “He clearly doesn’t see much downside and he probably sees a lot of upside,” she explains.

However, “If you’re buying on his coat tails, I’d be careful,” adds trader Josh Brown, author of The Reformed Broker blog.

Ackman tends to have a long time horizon.

"This isn't about a quick pop in the hopes that Ackman gets them to jettison a few brands," he says.

However, if you have a longer time horizon, he adds, “If you’ve got time, then I do think his position is a bet that share prices is going north.”


Posted by CNBC's Lee Brodie

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Trader disclosure: On July 18, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long GOOG; Karen Finerman is long GB; Karen Finerman is short SPY; Karen Finerman is short MDY; Karen Finerman is short IWM; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Dan Nathan is long BAC JULY 6 + 7 PUTS; Dan Nathan is long C AUG 26/23 PUT SPREAD; Dan Nathan is long MS OCT 10/5 1X2 PUT SPREAD; Dan Nathan is long INTC JULY/AUG 24 PUT SPREAD; Dan Nathan is long WMT JULY 6750 PUT SPREAD; Dan Nathan is long SBUXAUG 50/45 PUT SPREAD; Dan Nathan is long SDS; Dan Nathan is long VIX AUG 20/25 PUT SPREAD; Josh Brown is long AAPL; Josh Brown is long JPM; Josh Brown is long GDX; Josh Brown is long GLD; Josh Brown is long XLU; Josh Brown is long XLF; Josh Brown is long WMT; Josh Brown is long TGT; Josh Brown is long MCD; Josh Brown is long QCOM

For Brian Marshall
Neither ISI nor its affiliates beneficially own 1% or more of any class of common equity securities of the subject companies referenced in this Report. No person(s) responsible for preparing this report or a member of his/her household serve as an officer, director or advisory board member of any of the subject companies. Neither ISI nor its affiliates have any investment banking or market making operations. At various times these reports mention clients of ISI from whom ISI has received non-investment banking securities related compensation in the past 12 months.


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