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CNBC EXCLUSIVE: CNBC TRANSCRIPT: FOUNDER AND CEO OF PERSHING SQUARE CAPITAL MANAGEMENT BILL ACKMAN SPEAKS WITH SCOTT WAPNER TODAY

WHEN: Today, Monday, November 6, 2017

WHERE: CNBC's "FAST MONEY HALFTIME REPORT"

Following is the unofficial transcript of an EXCLUSIVE CNBC INTERVIEW with Founder and CEO of Pershing Square Capital Management Bill Ackman and CNBC's Scott Wapner on CNBC's "Fast Money Halftime Report" (M-F 12PM – 1PM ET) today, Monday, November 6th. Following are links to the video on CNBC.com: https://www.cnbc.com/video/2017/11/06/hedge-fund-activist-bill-ackman-we-can-increase-margins-at-adp-by-60-percent.html, https://www.cnbc.com/video/2017/11/06/hedge-fund-activist-bill-ackman-well-keep-adp-shares-whether-we-win-or-lose-investor-vote.html, https://www.cnbc.com/video/2017/11/06/hedge-fund-activist-bill-ackman-responds-to-leon-coopermans-criticism-of-adp-fight.html, https://www.cnbc.com/video/2017/11/06/activist-bill-ackman-on-herbalife-weve-been-entirely-right-on-the-facts.html, https://www.cnbc.com/video/2017/11/06/billionaire-investor-bill-ackman-all-of-chipotles-issues-are-addressable.html, & https://www.cnbc.com/video/2017/11/06/billionaire-investor-bill-ackman-says-shopping-malls-will-still-exist-in-five-years.html.

All references must be sourced to CNBC.

SCOTT WAPNER: AND WELCOME TO "THE HALFTIME REPORT." I'M SCOTT WAPNER WE BEGIN WITH A HALFTIME EXCLUSIVE INTERVIEW, BILL ACKMAN AND THE FINAL FIGHT OVER ADP THE PROXY VOTE LESS THAN 24 HOURS AWAY AND THE COMPANY'S FUTURE HANGING IN THE BALANCE. THE STAKES ALSO HIGH FOR MR. ACKMAN HIMSELF AFTER TWO TOUGH YEARS AND QUESTIONS ABOUT HIS OWN FUTURE AS AN ACTIVIST INVESTOR. BILL ACKMAN BACK WITH US HERE TODAY IN STUDIO. WELCOME BACK.

BILL ACKMAN: THANK YOU

WAPNER: LET'S START. THIS IS THE FINAL PUSH. HOW ARE YOU FEELING GOING INTO THIS VOTE?

ACKMAN: GREAT.

WAPNER: YEAH? EVEN THOUGH DAVID FABER EARLIER REPORTED THAT ACCORDING TO HIS INFORMATION THAT YOU'RE GOING TO COME UP SHORT.

ACKMAN: YEAH. SO HERE ARE THE FACTS. FACTS ARE I DON'T KNOW WHETHER WE'RE GOING TO WIN OR LOSE TOMORROW NEITHER DOES ADP, SO WHEN I SAW FABER'S REPORT I WAS KIND OF PUZZLED BY IT, SO I LOOKED THE TOP TEN INVESTORS OWN 32% OF THE COMPANY. 75% OF THOSE SHARES HAVE NOT BEEN VOTED YET, AND WHY IS THAT? BECAUSE THE BIG INSTITUTIONS WAIT UNTIL THE ABSOLUTE 11th HOUR TO VOTE BECAUSE THEY DON'T WANT TO GET LOBBIED BY MANAGEMENT OR US WANT TO PUT THEIR VOTES IN AND HAVE IT BE DEFINITIVE. I DON'T KNOW IF THERE'S ANY WAY SOMEONE CAN ACTUALLY CALL THE ELECTION AND POINT OUT UNDER THE PROXY RULES IT'S ILLEGAL FOR EITHER SIDE TO INDICATE HOW THE VOTE IS GOING. NOW, OBVIOUSLY MR. FABER IS GOING TO REPORT WHATEVER SOURCES HE GETS, BUT, YOU KNOW, I CERTAINLY HAVE NO INCENTIVE TO HAVE HIM REPORT THAT WE'RE LOSING SO CLEARLY SOMEONE ON THE OTHER SIDE PERHAPS IT SUGGESTED THAT. IT'S JUST NOT APPROPRIATE BEHAVIOR THE BOTTOM LINE WE DONT KNOW TODAY, AND -- AND, YOU KNOW, WELL JUST TALK ABOUT WHAT THE PROXY CONTEST IS ABOUT WHETHER WE WIN OR LOSE TOMORROW, LET'S COMPARE WHATS HAPPENED OVER THE LAST 90 DAYS 90 DAYS, CNBC PLAYED A ROLE HERE CEO WENT ON TV AND SAID, I'LL QUOTE HIM EXACTLY. HE SAID I'M DIRECTLY SAYING BILL ACKMAN DOESN'T KNOW WHAT HE'S TALKING ABOUT. THAT WAS AUGUST 10th.

WAPNER: IS THAT WHEN HE CALLED YOU A SPOILED BRAT?

ACKMAN: YES AND THEN HE SAID ON AUGUST 17th WE STRONGLY DISAGREE WITH MANY OF THE ASSERTIONS MADE BY MR. ACKMAN. IT BETRAYS A FUNDAMENTAL LACK OF UNDERSTANDING OF THE CURRENT STATE OF OUR BUSINESS. THAT'S A PRESS RELEASE AUGUST 17 BY THE COMPANY. HERE WE ARE OCTOBER 20 LET'S LOOK AT HOW THE MESSAGE HAS CHANGED 90 DAYS LATER AND THIS IS CARLOS. HE SAYS WE PROBABLY AGREE ON A LOT OF DIFFERENT THINGS FROM A THEMEATIC STANDPOINT THE NEED TO TRANSFORM OUR TECHNOLOGY AT ADP, NEED TO BE EFFICIENT TO IMPROVE MARGINS AND THEN HE SAYS HES A FEW YEARS LATE IN TERMS OF THE IDEAS HE HAS, AND HE ALSO SAID WE JUST GOT IT TO ANOTHER 500 BASIS POINT IMPROVEMENT OVER THE NEXT THREE YEARS SO IF MR. ACKMAN IS ADVOCATING FOR A 1200 BASIS POINT MARGIN IMPROVEMENT WE OVER 6 TO 9 YEARS WILL BE ABLE TO ACCOMPLISH THE SAME THING. THE PROBLEM IS THE COMPANY DIDNT TAKE US SERIOUSLY IN THE BEGINNING AND OVER THE COURSE OF 90 DAYS WEVE DONE A NUMBER OF THINGS, ONE, EDUCATE THE ADP SHAREHOLDER ABOUT HOW BIG THE OPPORTUNITY IS TO RUN THE COMPANY MUCH MORE EFFECTIVELY. THERE'S NOT A SHAREHOLDER WHO DISAGREES THIS COMPANY COULD BE MUCH MORE PROFITABLE AND EFFICIENT THAN IT IS TODAY.

WAPNER: YOU CAN MAKE THAT POINT ABOUT ANY COMPANY ON PLANET EARTH COULD BE MORE EFFICIENT AND THIS COMPANY COULD DO THIS BETTER

ACKMAN: I'M NOT SAYING MORE EFFICIENT. WE THINK THE COMPANY CAN INCREASE ITS MARGINS BY 60%, RIGHT, FROM 20% TO 32%, A HUGE INCREASE FOR A COMPANY OF THIS SIZE SO THERE'S ABSOLUTELY A BUY-IN AMONG THE SHAREHOLDER BASE AND CARLOS IS TALKING ABOUT A 500 BASIS POINT IMPROVEMENT. LET ME FINISH MY POINT. MY POINT IS WHAT DOES AN ACTIVIST INVESTOR ATTEMPTS TO DO AN ACTIVIST INVESTOR ATTEMPTS TO PROD A COMPANY TO ACHIEVE ITS BEST WE HAVE VARIOUS TECHNIQUES TO DO THAT WRITE PUBLIC LETTERS, HAVE A PROXY CONTEST, JOIN BOARD OF DIRECTORS, BUT WHATEVER THE OUTCOME IS TOMORROW, WEVE ACCOMPLISHED OUR OBJECTIVE OF PUTTING THE COMPANY IN A POSITION WHERE IT WILL HAVE TO PERFORM. IF WE END UP ON THE BOARD, WELL WORK VERY CLOSELY WITH MANAGMENT AS A MEMBER OF THE BOARD AND THEN OTHER DIRECTORS TO HELP MAKE IT HAPPEN IF WE DONT END UP ON THE BOARD ITS COMPLETELY UP TO MANAGEMENT AND THIS BOARD TO DELIVER BUT THE SHAREHOLDERS WILL HOLD MANAGEMENT ACCOUNTABLE AND THE COMPANY HAVE MADE A SIGNIFICANT NUMBER OF COMMITMENTS AND ILL REVEAL A FEW OF THEM HAD. ONE, GROWTH WILL BE 6% TO 7% OVER THE NEXT THREE YEARS AND THEY ARE PROJECTING 2% TO 3% TO THE YEAR THAT ENDS JUNE 30th NEXT YEAR MEANING THE GROWTH WILL HAVE TO JUMP BEGINNING, YOU KNOW, THE THIRD CALENDAR QUARTER OF NEXT YEAR, THEY HAVE TO SHOW SOME PRETTY DRAMATIC PROGRESS AND WILL HAVE TO SHOW PRETTY DRAMATIC PROGRESS IN THE BACK HALF OF THIS YEAR BECAUSE THEY SAY THE GROWTH IS SORT OF BACK END WEIGHTED. THAT'S A BIG COMMITMENT THEY WILL HAVE TO LIVE UP TO. THEY ARE ALSO COMMITTING TO THIS 500 TO 600 BASIS POINT MARGIN WE ARE SKEPTICAL OF THAT NUMBER AND THATS A COMMITMENT THAT THEY HAVE MADE PUBLICLY, AND THEN WITH ISS, ONE OF THE PROXY ADVISORY FIRMS, AND ILL QUOTE WHAT THEY SAID THERE THEY TALKED ABOUT THE UPCOMING RELEASE OF THEIR SO-CALLED VANTAGE 2.0.

WAPNER: THEY SAID THE BOARD NEEDS CHANGE, BUT THEY STOP SHORT OF RECOMMENDING YOU

ACKMAN: NO, THAT'S NOT TRUE ISS RECOMMENDED ME TO THE BOARD, BUT THEY -- THE MECHANISM BY WHICH THEY RECOMMENDED ME WAS TO RECOMMEND SHAREHOLDERS, THEIR CLIIENTS WITHHOLD AGAINST A DIRECTOR ON THE OTHER SLATE.

WAPNER: WELL, THEY DIDN'T SUGGEST PEOPLE VOTE FOR YOU OR YOUR NOMINEES.

ACKMAN: WHAT THEY DIDN'T HAVE HAPPEN, AS THEY SAY, THEY DIDN'T FEEL IT WAS NECESSARY FOR THREE NEW DIRECTORS TO JOIN THE BOARD SO THEY FELT BY WITHHOLDING FOR ONE THEY WOULD INCREASE THE CHANCE I JOIN WITHOUT INCREASING THE CHANCE DIRECTORS TWO AND THREE JOIN ISS CONSIDERED A COUPLE OF MITIGATING FACTORS WHEN THEY GAVE THAT RECOMMENDATION AND ONE WAS THE FOLLOWING. IT SAYS IN RESPONDING TO THE DISSONANCE CHALLENGE THE COMPANY ARGUES THAT THE UPCOMING RELEASE OF ITS NEW VANTAGE 2.0 PLATFORM FOR LARGE CLIENTS WILL OFFER BETTER SERVICE AND HELP REVERT THIS NEGATIVE TREND RIGHT. SO ONE OF THE THINGS THAT ISS CONSIDERED IS THAT THE COMPANY IS EFFECTIVELY ANNOUNCED THEY WILL HAVE A NEW VERSION OF THEIR PRODUCT SO THATS UPCOMING UPCOMING CERTAINLY YOU WOULD EXPECT THAT IN THE RELATIVE SHORT TERM, SO IN ORDER – IF THE COMPANY WINS, IT WILL – IT WILL BE BECAUSE THEY MADE COMMITMENTS TO SHAREHOLDERS, AND THEY WILL HAVE TO DELIVER ON THEM, AND IF THEY DONT, YOU KNOW, WELL BE BACK AT THEM, YOU KNOW, WERE NINE MONTHS AWAY FROM THE LAUNCH OF THE NEXT PROXY CONTEST. WE HOPE WE DONT HAVE TO GO THERE ARE. I HOPE MANAGEMENT DELIVERS AND IS SUPER SUCCESSFUL. THAT'S THE DOWNSIDE CASE OF MY NOT JOINING THE BOARD.

WAPNER: IF YOU LOSE TOMORROW.

ACKMAN: YES.

WAPNER: YOU'RE NOT SELLING YOUR SHARES?

ACKMAN: WE'LL KEEP A LARGE POSITION IN THE COMPANY WELL ALWAYS MAKE ADJUSTMENTS ACCORDING TO CAPITOL FLOWS AND THAT KIND OF THING THIS WILL BE A MAJOR MAJOR INVESTMENT FOR US, AND, YOU KNOW, WE LIKE THE COMPANY. WE THINK THERES A HUGE OPPORTUNITY TO MAKE IT MORE PROFITABLE WE HAVE THE MANAGEMENT AND POSITION NOW WHERE THEY RAN AROUND A SHAREHOLDERS AND MADE A LOT OF COMMITMENTS AND PUBLIC COMMITMENTS AND COMMITMENTS TO ISS. IF THEY DONT DELIVER, WHATS GREAT ABOUT THIS STRATEGY IS GOOD NEWS IS GOOD NEWS FOR US. IF THEY DELIVER STOCK GO UP WELL MAKE A LOT OF MONEY OUR INVESTORS WILL BE HAPPY AND IF THEY DON'T DELIVER WELL HAVE A LANDSLIDE NEXT YEAR. GOD WILLING WELL WIN TOMORROW, BUT I CAN'T CALL THE ELECTION FOR TOMORROW BUT EITHER WAY SHAREHOLDERS WIN WHICH IS THE MOST IMPORTANT THING.

WAPNER: GOING BACK TO THE FABER REPORT THIS MORNING, YOU KNOW, DAVID HAS BEEN AT THIS A LONG TIME OBVIOUSLY A VERY CREDIBLE REPORTER WITH GOOD SOURCES YOU DONT FEEL LIKE YOU HAVE AN UPHILL BATTLE AND CERTAINLY --

ACKMAN: WE'VE ALWAYS BEEN THE UNDERDOG.

WAPNER: YOU DON'T FEEL BASED ON HIS REPORT THAT THIS IS NOT GOING TO WORK OUT.

ACKMAN: I WOULD LOVE TO KNOW WHOSE DAVID SOURCE IS FOR THE NOTION THAT WERE LOSING, RIGHT, BECAUSE THE SHAREHOLDERS HAVEN'T VOTED YET, AND -- AND, YOU KNOW, THE TOP TEN SHAREHOLDERS ARE GOING TO VOTE. WE KNOW FOR A CERTAINTY, AND THERE ARE 32% OF THE SHARES OUTSTANDING, AND THEY ARE MORE THAN THAT -- PROBABLY 40 PERCENTAGE POINTS OF THE VOTE THAT WILL BE TURNED IN THE FACT THAT 75% OF THOSE SHARES HAVENT VOTED YET, YOU KNOW, ABSENT VANGUARD/BLACK ROCK AND STATE STREET AND NORTHERN TRUST LEAKING TO CNBC, WHICH I THINK THE PROBABILITY OF THAT IS VERY CLOSE TO ZERO, YOU KNOW, THE FACT THAT ONE SHARE HOLD HER AND ANOTHER IS SUPPORTING US ONTARIO TEACHERS JUST CAME OUT SUPPORTING US, ITS GREAT NEWS, FANTASTIC, GREAT NEWS BUT DOESNT MEAN WELL WIN.

WAPNER: WHAT ABOUT THE IDEA THAT CRAMER PUT FORTH THIS MORNING ON THE SAME PROGRAM HE SAID THAT ADP IS JUST NOT BAD ENOUGH, RIGHT? MAYBE THEY CAN IMPROVE THIS. MAYBE THEY CAN IMPROVE THAT. 40% RETURN ON EQUITY THE MARKET HAS GIVEN THEM A 28 MULTIPLE AND THE STOCK HAS DONE WELL OBVIOUSLY. WHAT'S WRONG WITH THAT?

ACKMAN: SURE. SO –

WAPNER: ISN'T THAT EVIDENCE THAT THE COMPANY IS NOT -- DOESNT NEED THE LEVEL OF INTERFERENCE, IF YOU WANT TO CALL IT THAT?

ACKMAN: WE'RE NOT INTERFERING, SO I THINK A FEW IMPORTANT THINGS NUMBER ONE, THE REASON WHY THE STOCK IS TRADING AT A 28 PE IS BECAUSE OF OUR INVOLVEMENT, YOU KNOW THE UNAFFECTED PRICE, ACCORDING TO ANALYSTS BEFORE OUR INVOLVMENT IS $97, $98 PER SHAE. TODAY ITS 110 AND 112 AND THE STOCK HAS BEEN A BIT OF A WEATHER VANE ON OUR WINNING WHEN WE GOT THE GLASS LEWIS SUPPORT THE STOCK RAN TO $118 AND WHEN WE GOT THE ISS REPORT WHICH WASNT AS GREAT AN ENDORSEMENT THE STOCK DROPPED TO 112 OR WHEN DAVID LEAKED OR WHATEVER YOU WANT TO CALL IT.

WAPNER: HE REPORTED.

ACKMAN: I'M SORRY WHEN HE REPORTED BASED ON UNNAMED ANONYMOUS SOURCES THAT, YOU KNOW, LOOKS LIKE WERE GOING TO LOSE, THE STOCK HAS GONE DOWN TODAY ON THAT FACT WHAT SHAREHOLDERS IS SAYING IS OUR INVOLVEMENT IS CLEARLY A POSITIVE YOU CAN SEE THAT IN THE STOCK PRICE EVERY DAY AND THATS HOW THE SHORTER-TERM INVESTORS WILL TRADE THE STOCK BASED ON WHETHER WE WIN OR LOSE TOMORROW. THE IMPORTANT THINGS ARE WE HAVE EDUCATED THE SHAREHOLDER BASE. THERES NOT A SHAREHOLDER WE HAVE MET WITH THE THAT HASNT THANK THE US FOR THE QUALITY OF THE RESEARCH WE PUT OUT ON THE COMPANY. VOLUMINOUS AMOUNT OF INFORMATION AND DETAIL THAT WE PUT OUT THERE THAT LIFTS THE VEIL ON THINGS THAT WERE NOT UNDERSTOOD ABOUT THE BUSINESS THATS INHERENTLY POSITIVE FOR THE COMPANY AND INHERENTLY POSITIVE THING FOR THE SHAREHOLDERS IF WE LOSE TOMORROW IT WILL BE BECAUSE AN INVESTOR SAYS, YOU KNOW WHAT, BILL, ILL GIVE THEM ANOTHER NINE MONTHS. THEY MADE A BUNCH OF PROMISES TO ME I LIKE THEIR PROMISES. I LIKE GROWTH INFLECTING STARTING THE BACK HALF OF NEXT YEAR AND LIKE 7% TO 9% GROWTH FOR 19 AND 20, AGAIN, WHAT ISS IS REFERRING TO IN THEIR REPORT AND I RESPECT ISSS DECISION TO CONSIDER THOSE AS MITIGATING FACTORS AND RESPECT THAT THEY HAVE AN UPCOMING RELEASE OF A PRODUCT THATS GOING TO WIN BACK MARKET SHARE WHICH IS WHAT IT SAYS IN THE ISS REPORT THAT MANAGEMENT APPARENTLY TOLD ISS, BUT IF MANAGEMENT DOESN'T DELIVER ON THE COMMITMENTS THAT ITS MADE TO ISS AND TO SHAREHOLDERS WELL BE IN A VERY INFLUENTIAL POSITION IN THE COMPANY AGAIN THAT'S IN THE CASE IF WE LOSE TOMORROW THE ONLY THING THATS DECIDED TOMORROW IS WHO IS RESPONSIBLE FOR DELIVERING ON THE COMMITMENTS THAT ARE MADE BY MANAGEMENT. I'M ON THE BOARD OF THE COMPANY I AND THE OTHER NINE DIRECTORS, WHETHER THEY INCLUDE OUR TWO OTHER NOMINEES OR JUST ME ON THAT BOARD, WERE GOING TO BE RESPONSIBLE FOR DELIVERING FOR SHAREHOLDERS IF I DON'T END UP ON THE BOARD TOMORROW, THEN ITS ALL ON MANAGEMENT ITS ALL ON THIS BOARD AND THEIR ABILITY TO DELIVER, AND THEY HAVE GOT IN TO LIVE UP TO THE COMMITMENTS THEY MADE TO THE PROXY ADVISORY FIRMS, BECAUSE THOSE ARE PUBLIC COMMITMENTS THEY HAVE TO LIVE UP TO THE COMMITMENTS THEY MADE TO SHAREHOLDERS.

WAPNER: YOU DON'T TAKE ANY PERSONAL RESPONSIBILITY FOR HOW THIS WHOLE THING HAS PLAYED OUT THE, LIKE THE KIND OF CRITICISM THAT LEE COOPERMAN HAS LEVELED AGAINST YOU, THAT IF YOU WOULD HAVE JUST MET WITH THE COMPANY PRIVATELY?

ACKMAN: OKAY.

WAPNER: NOT WAGED THIS PROXY NIGHT?

ACKMAN: WE TRIED.

WAPNER: THAT'S THE CRITICISM THAT YOU HEAR FROM LEE AND –

ACKMAN: TWO THINGS ON LEE. WHY HAS LEE BY THE WAY, COME ON CNBC THREE TIMES OR WHATEVER TO CRITICIZE WHAT HE CALLS MY COMPORTMENT? THE ANSWER IS WHEN ASKED DIRECTLY ABOUT OUR CASE FOR CHANGE, HE REFUSES TO ADDRESS THE CASE FOR CHANGE. ALL ABOUT MY COMPORTMENT WHICH HAS NOTHING BUT OTHER THAN INCREDIBLY POLITE, STRAIGHTFORWARD. I FINALLY FIGURED OUT WHY LEE HAS BEEN GOING ON CNBC ALL THE TIME LEE IS ON THE BOARD OF OVERSEERS OF COLOMBIA BUSINESS SCHOOL. THE DEAN IS GLENN HUBBARD. BOTH LEE AND I LIKE GLENN HUBBARD. WE CHOSE TO RUN AGAINST HIM BECAUSE HES ON THE BOARD FOR 13 YEARS. HE IS THE LONGEST STANDING DIRECTOR AND IN SOME SENSE HES THE MOST VULNERABLE BY VIRTUE OF THAT I DON'T THINK HE LIKED THAT I WAS GOING AFTER THE DIRECTOR I DONT THINK IT HAS ANYTHING TO DO WITH THE FUNDAMENTAL FACTS ABOUT ADP.

WAPNER: HE WAS ON THE BOARD FOR 20 YEARS.

ACKMAN: LEFT FIVE YEARS AGO.

WAPNER: HE WAS ON THE BOARD FOR 20 YEARS

ACKMAN: HE'S UNWILLING TO COMMENT ABOUT OUR CASE FOR CHANGE. I LIKE LEE AND HES PROTECTING HIS FRIEND AND I RESPECT PEOPLE WHO ARE LOYAL AND PROTECT FRIEND BUT THAT'S NOT WHAT THIS IS ABOUT I LIKE GLENN HUBBARD HE'S A TERRIFIC GUY BUT HES ADDED AS MUCH VALUE AS HE CAN OVER A 13 PERIOD OF TIME WHICH IS WHY WE SOUGHT TO REPLACE HIM AND THE OTHER TWO LONGEST – I WANT TO ANSWER YOUR QUESTION, FULLY, SCOTT GIVE ME A CHANCE.

WAPNER: GO AHEAD.

ACKMAN: WE SOUGHT TO REPLACE HIM FOR THAT REASON. BUT IN TERMS OF MY CONDUCT HERE, THE CHOICE WE WERE GIVEN BY MANAGEMENT AND THE BOARD WAS EITHER TO FILE A SLATE THE BOARD WAS NOT WILLING TO MEET WITH US -- I WANTED TO HAVE A FULL MEETING WITH THE BOARD, WORK PRIVATELY WITH THEM AS WE HAVE WITH AIR PRODUCTS AND ZOETIS AND MANY OTHER COMPANIES AS WERE WORKING VERY HARD WITH CHIPOTLE AS WE DEAL WITH THEIR ISSUES AND ITS ALL HAPPENING IN THE BACKGROUND AND PRIVATELY THE BOARD HAD A CHOICE TO MAKE IF THEY HAD GIVEN US A ONE-WEEK EXTENSION AND THE BOARD HAD AGREED TO MEET WITH US WITHIN THAT ONE-WEEK EXTENSION PROCESS WE COULD HAVE AVOIDED A PROXY CONTEST. I THINK BUT IT'S UP TO THEM. AT THE END OF THE DAY I THINK IT'S BEEN A VERY, VERY HEALTHY THING FOR THE COMPANY ONE, THE CEO HAS GONE OUT TO MEET WITH THE MAJOR SHAREHOLDERS ITS GOOD FOR THEM TO MAKE PROMISE TO INVESTORS BECAUSE THATS HOW THEY WILL HOLD HIM ACCOUNTABLE AND ITS BEEN A VERY GOOD THING FOR US TO AS I SAY LIFT THE VEIL ON THE COMPANY AND THE SHAREHOLDERS TODAY, AND LOOK AT EVERY ANALYST REPORT AND EVERY ONE OF THEM HAVE SAID WEVE DONE A SUPERB JOB EDUCATING PEOPLE ABOUT THE SITUATION, AND THAT ULTIMATELY IS WHAT HOLDS THE COMPANY ACCOUNTABLE TO DELIVER, AND THAT'S HOW WELL MAKE MONEY. MY INVESTORS WILL JUDGE US, NOT BASED ON WHETHER WE WIN OR LOSE A PROXY CONTEST. THEY WILL JUDGE US BASED ON HOW DID WE DO ON THIS INVESTMENT, SO THE STOCK IS UP, YOU KNOW, FROM 98 TO 110, WE EXPECT IT TO GO A LOT HIGHER AND WHETHER THATS BECAUSE MANAGEMENT DOES EVERYTHING AND THE EXISTING BOARD TAKES IT AWAY, THATS TERRIFIC. I HOPE THAT HAPPENS FOR THEM IT'S AN AMAZING THING. IF I LOSE, I WANT THE COMPANY TO DO EXTREMELY WELL. IF WE WIN THE PROXY CONTEST, WELL WORK INSIDE THE BOARD OF ROOM TO HELP THEM OUT. JUST LIKES NELSON WHO LOST A PROXY CONTEST AT DOW CHEMICAL, RIGHT. IT WAS DUPONT.

WAPNER: DUPONT.

ACKMAN: NO, IT WAS DUPONT. HE LOST TO DUPONT. AND THEN— NOW MANAGEMENT WAS UNDER A LOT OF PRESSURE. THEY MISSED ONE QUARTER, FAIRLY DRAMATICALLY AND THE BOARD FIRED THE CEO. AND THAT STOCK, I THINK, HAS BEEN A DOUBLE, ULTIMATELY. EVEN THOUGH NELSON LOST THE PROXY CONTEST. RIGHT? P & G, SORT OF THE SAME STORY, IT'S STILL EARLY. P&G MANAGEMENT RAN AROUND, MADE A LOT OF COMMITMENTS AND "NELSON WOULD BE DANGEROUS." APPARENTLY HE'S LOST THE PROXY CONTEST BY A SMALL MARGIN BUT THAT MANAGEMENT TEAM IS UNDER HUGE PRESSURE TO PERFORM. THE FIRST QUARTER AFTER THE PROXY CONTEST THEY CERTAINLY HAVE DISAPPOINTED SHAREHOLDERS. THE STOCK IS DOWN 10 BUCKS. AND IF THEY DON'T MAKE MEANINGFUL PROGRESS OVER THE NEXT COUPLE OF QUARTERS, THEY'LL BE OUT.

WAPNER: THEORETICALLY, YOU DID ENOUGH WORK ON ADP, THAT YOU COULD HAVE TRIED – COULD YOU NOT HAVE? -- TO MEET WITH THE COMPANY.

ACKMAN: SCOTT, WE DID.

WAPNER: LET ME FINISH.

ACKMAN: I 100% TRIED UP TO THEM WHETHER THEY WILL MEET WITH US.

WAPNER: BEFORE YOU HAD TO ASK FOR AN EXTENSION TO THE NOMINATING PERIOD, AND MAYBE THIS WOULD GONE DIFFERENTLY HAD YOU HAD A PRIVATE, QUIET CONVERSATION WITH THE COMPANY WITHOUT ASKING THEM TO –

ACKMAN: IT'S ALL THEORETICAL.

WAPNER: PUSH FORWARD.

ACKMAN: BOTTOM LINE IS –

WAPNER: BUT IT'S RELEVANT TO THIS CONVERSATION.

ACKMAN: NOT PARTICULARLY RELEVANT.

WAPNER: BECAUSE THINGS MAY HAVE WORKED OUT DIFFERENTLY.

ACKMAN: I DISAGREE. AGAIN, I THINK IF I – IF THE BOARD AGREED TO MEET WITH US IT COULD HAVE WORKED OUT DIFFERENTLY. THAT SAID, NOT UNHAPPY WITH WHERE WE ARE. A COMPANY HAS THE RESULT OF A PROXY CONTEST. MADE A NUMBER OF VERY SIGNIFICANT COMMITMENTS ABOUT REVENUE GROWTH, ABOUT MARGINS, ABOUT DELIVERING A NEW VERSION OF THEIR PRODUCT. I MEAN, THESE ARE PRETTY SERIOUS COMMITMENTS THAT THEY HAVE MADE THAT WILL HELP ACROSS THE PROBLEMS WE'VE IDENTIFIED. IF THEY FAIL TO DELIVER, YOU KNOW, IT'S – IT'S NINE MONTHS FROM NOW THAT WE HAVE TO LAUNCH -- IS THE NOMINATING DEADLINE. AND LET ME MAKE A FEW OTHER THINGS CLEAR ONE. ONE OF THE THINGS THAT HURT US IN THIS CONTEST, IS A DISADVANTAGE, IS THE COMPANY DIDN'T HAVE A UNIVERSAL PROXY CARD AND SAID WE ASKED FOR IT TOO LATE. SEPTEMBER 10th AFTER THEY REJECTED OR WENT TO THEM AND SAID, OR SEPTEMBER 12th, "WE'D LIKE A UNIVERSAL PROXY CARD SO SHAREHOLDERS CAN PICK THE BOARD MEMBERS THEY WANT."

WAPNER: SO PEOPLE ARE CLEAR ABOUT WHAT THEY TALK ABOUT – IF YOU DON'T ATTEND THE MEETING, YOU HAVE TO VOTE FOR EITHER YOUR CANDIDATES OR THE COMPANIES. THERE'S NO PICKING OR CHOOSING FROM EITHER CATEGORY. AND YOU SAY THAT'S UNFAIR.

ACKMAN: IT'S JUST NOT FAIR TO SHAREHOLDERS. AND BY THE WAY NOT AN INSTITUTION IN THE WORLD WHO LIKES THE CURRENT SCENARIO. SO THEY SAID WE ASKED TOO LATE – IT WOULD BE TOO CONFUSING. WHAT I'M DOING NOW IS I'M OFFICIALLY ASKING FOR THE UNIVERSAL PROXY CARD FOR NEXT YEAR'S ELECTION. AND NOW WE'RE A YEAR AWAY FROM NEXT YEARS ELECTION, THERE'S GONNA BE NO ISSUE WITH A PROXY CARD NEXT YEAR BECAUSE ITS GOING TO BE HARD FOR THE COMPANY TO ARGUE THAT THEY HAVEN'T GOT ENOUGH NOTICE. AND AGAIN, I HOPE WE DON'T HAVE TO RUN ANOTHER PROXY CONTEST. BUT IN THE EVENT WE DO, THERE WILL NO LONGER HAVE THE EXCUSE WE ASKED TOO LATE.

WAPNER: WHEN YOU MADE THIS COMMENT IN THAT INTERVIEW, BY THE WAY, WITH THE STREET, SOMEBODY E-MAILED ME AND SAYS, "THERE GOES ACKMAN. HE THINKS HE WANTS TO LOSE, SO NOW WANTS TO MOVE THE GOAL POST, HE WANTS TO CHANGE THE GAME, CHANGE THE RULES."

ACKMAN: NO, NO, NO NOT CHANGING THE GOAL POSTS. SO ONE OF THING, KIND OF A BIGGER ISSUE, BUT SOMETHING THAT REALLY NEEDS TO BE ADDRESSED, THIS ELECTION IS A PERFECT EXAMPLE OF THAT. IS THAT – THINK ABOUT -- IMAGINE IF YOU HAD TO VOTE FOR -- YOU COULD ONLY VOTE FOR THE REPUBLICAN CANDIDATES FOR EVERY LINE ITEM – EVERY CANDIDATE ON THE NOVEMBER 7th. OR YOU CAN ONLY VOTE FOR THE DEMOCRATS. YOU COULDN'T PICK A DEMOCRAT OR A REPUBLICAN OR AN INDEPENDENT, YOU KNOW, FOR PRESIDENT, FOR ALL THE VARIOUS – YOU KNOW – YOUR LOCAL STATE SENATOR, ET CETERA. IT'S NOT JUST -- PEOPLE WOULD BE IN AN UPROAR ABOUT THAT, ULTIMATELY IN THE GENERAL ELECTION. HERE, THERE'S NO REASON – THE ONLY REASON WHY COMPANIES REFUSE TO GO ALONG WITH THIS BECAUSE IT'S A TACTIC THAT ADVANTAGES THE COMPANY. AND SO MAKE IT VERY STRAIGHTFORWARD FOR SURE SHAREHOLDERS. PICK THE BEST DIRECTOR ON THE SLATE AND THE ONES WITH THE FEWEST VOTES AND THE ONES WHO DON'T DROP OFF THE BOARD. THAT'S A VERY SIMPLE THING TO ASK FOR.

WAPNER: HOW MUCH OF THIS DO YOU THINK IS A REFERENDUM ON YOU, PERSONALLY. "WALL STREET JOURNAL" HAS A STORY THAT STAYS THE VOTE OFFERS, QUOTE, A STATUS CHECK ON THE STANDING OF ACTIVIST INVESTOR BILL ACKMAN. A WIN COULD BE A REPRIEVE AND BAD LOSS COULD RAISE QUESTIONS ABOUT YOUR FUTURE.

ACKMAM" I THINK THE TEST HERE IS GOING TO BE HOW DOES ADP DO OVER THE NEXT 12 MONTHS, AND OVER THE NEXT THREE YEARS? THAT'S THE TEST. HAVE WE PICKED A GOOD TARGET? ARE WE RIGHT ABOUT THE OPPORTUNITY FOR MARGIN IMPROVEMENT? AND DOES – HOW DO WE GET THERE? DO WE GET THERE BY MY JOINING THE BOARD OR WE DO WE GET THERE BY WE PUT ENOUGH PRESSURE BY VIRTUE OF THE PROXY CONTEST THAT THE COMPANY ACCELERATES MARKET IMPROVEMENT, ACCELERATES THE LAUNCH OF A NEW PRODUCT? IF THAT HAPPENS, IT'S A WIN FOR US. IF ADP STOCK IS DOWN 50%, IT'S A MASSIVE LOSS FOR US, AND IT'S A DISASTER. IF ADP STOCK IS UP 20% OVER THE NEXT YEAR, I THINK OUR INVESTORS ARE GOING TO BE VERY HAPPY. SO THEY'RE NOT GOING TO JUDGE US BASED ON WINNING OR LOSING A PROXY CONTEST. THEY'RE GONNA JUDGE US HOW THIS INVESTMENT DOES OVER TIME. WE'RE OFF TO A GOOD START. THE STOCK IS UP A BUNCH FROM WHERE WE ACQUIRED IT, AND YOU KNOW, WE'LL SEE.

WAPNER: THERE ARE INEVITABLY THOUGH PEOPLE WHO ARE GOING TO JUDGE –

ACKMAN: WHO CAN SAY WHATEVER THEY WANT.

WAPNER: -- YOU BASED ON THE SUCCESS OR FAILURE OF THIS CURRENT BATTLE.

ACKMAN: I'M NOT AT POLITICIAN.

WAPNER: DO YOU THINK THAT'S FAIR?

ACKMAN: I'M NOT HAD A POLITICIAN. I'M NOT RUNNING FOR OFFICE. WHERE A WIN FOR OFFICE IS A WIN, AND A LOSS IS A LOSS.

WAPNER: I UNDERSTAND BUT YOU COMMENTED ON THIS PIECE. DO YOU FEEL THAT THOSE ARE THE STAKES FOR YOU PERSONALLY?

ACKMAN: THE STAKES HERE ARE THE OUTCOME OF THE INVESTMENT. IF THIS IS A GOOD INVESTMENT OR A GREAT INVESTMENT OR A BAD INVESTMENT, I WILL BE JUDGED ACCORDINGLY. AND ONE OF THE TECHNIQUES AN ACTIVIST USERS IS OCCASSIONALLY BRINGING A PROXY CONTEST – WE'VE DONE ONE EVERY FIVE YEARS. IF I GET ON THIS BOARD, AND YOU KNOW, THE COMPANY FAILS TO DELIVER ON PEOPLE'S EXPECTATIONS, IT WILL BE A BLACK EYE FOR ME. IF I DON'T JOIN THE BOARD AND THE COMPANY FAILS OVER THE NEXT -- TO DELIVER, IT WILL PUT UP IN A VERY STRONG POSITION TO BE INFLUENTIAL AT NEXT YEARS ANNUAL MEETING IF I'M UNSUCCESSFUL THIS YEAR.

WAPNER: HAS ANYBODY SAID TO YOU IN THE CANVASSING PROCESS THAT I'M SURE YOU AND YOUR ASSOCIATES HAVE DONE, "LOOK, SOME. IDEAS ARE GOOD, BUT BILL'S A RISK. BILL'S TOO MUCH OF A RISK TO VOTE WITH NOW GIVEN WHAT'S HAPPENED IN THE PAST COUPLE OF YEARS?"

ACKMAN: NO.

WAPNER: DO YOU FEAR THAT THAT COULD INFLUENCE THE VOTE PROCESS AT ALL?

ACKMAN: ANYTHING COULD INFLUENCE THE VOTE PROCESS. BUT I THINK THE INVESTORS HERE ARE FOCUSED ON WOULD ADDING A MAJOR SHAREHOLDER TO THE BOARD WILL BE HELPFUL. BUT I THINK WE'LL GET EVERYONE'S SUPPORT EXCEPT FOR THOSE WHO SAY "YOU KNOW WHAT, I'M GOING TO GIVE MANAGEMENT A FEW EXTRA QUARTERS TO DELIVER." IT'S NOT A DEBATE ABOUT -- COMPARE THIS TO THE GM PROXY CONTEST, RIGHT? WHERE SOMEONE ACCUSED GREEN LIGHT OF – THIS IS FINANCIAL ENGINEERING AND THEY LOSTM BECAUSE PEOPLE DIDN'T WANT FINANCIAL ENGINEERING AND THEY DIDN'T WANT TWO CLASSES OF STOCK. EVERYONE WANTS WHAT WE'VE BEEN ADVOCATING FOR: EVERYONE WANTS ADP TO HAVE HIGHER MARGINS, EVERYONE WANTS THEM TO ADDRESS THEIR ENTERPRISE COMPETITIVENESS, THEIR ENTERPRISE PRODUCT COMPETITIVENESS. AND THE QUESTION IS WHETHER OR NOT PEOPLE WANT US ON THE BOARD THIS YEAR OR WHETHER WE GET ON NEXT YEAR? DO WE GIVE MANAGE PRESIDENT -- THE VOTES WELL LOSE WILL BE SOMEONE -- NO ONE IS VOTING AGAINST THE IDEAS WE HAVE. IT WILL BE, "YOU KNOW WHAT, I'M GONNA GIVE MANAGEMENT—." THE STOCK HAS DONE WELL. THAT HURTS US. THAT'S WHY WE'RE THE UNDERDOG.

WAPNER: ALONG WITH SOME OTHER METRIX THAT I MENTIONED.

ACKMAN: YEAH BUT I THINK THE BIGGEST THING THAT HURT US IN THIS PROXY CONTEST IS THAT THE STOCK HAS DONE WELL VERSEUS THE S&P. IT'S MASSIVELY UNDERPERFORMED THE COMPETITORS IN THE INDUSTRY. A GREAT INDUSTRY, WHICH IS WHY THE STOCK HAS DONE AS WELL AS IT HAS, BUT THE JUDGMENT IN TERMS OF THE OUTCOME HERE IS GOING TO BE BASED ON HOW THE COMPANY DOES.

WAPNER: WHAT ABOUT FOR ACTIVISM IN AND OF ITSELF? YOU MENTIONED NELSON PELTZ.

ACKMAN: MM-HMM.

WAPNER: HE LOSES APPARENTLY THE MOST RECENT CONTEST THAT HE HAD WITH P & G, ALTHOUGH PEOPLE CLEARLY COULD MAKE A CASE IN SOME CORNERS THAT MAYBE AN ACTIVIST WAS NEEDED. CRAMER CERTAINLY TRIED TO MAKE THAT POINT, I THINK LEADING UP TO IT, AND THE STOCK PERFORMANCE OF P & G LEADING INTO THAT VOTE WHICH SUGGESTS THAT MAYBE HEY DO NEED A SHAKE-UP.

ACKMAN: MM-HMM.

WAPNER: THE DUPONT THING, OKAY, HE LOSES -- NELSON PELTZ LOSES THE VOTE, MAYBE WINS THE WAR IN THE LONG RUN. CEO LEAVES.

ACKMAN: YEAH.

WAPNER: COMPANY PERFORMANCE SINCE HAS BEEN BETTER. YOU MAY COME UP ON THE SHORT END OF THIS STICK.

ACKMAN: YES.

WAPNER: WHAT'S THE MESSAGE THERE FOR ACTIVISM IN GENERAL?

ACKMAN: I THINK YOU'RE MAKING ALL THE ARGUMENTS THAT I'M BASICALLY MAKING. IT'S NOT THE OUTCOME OF THIS PROXY CONTEST, WHETHER WE WIN OR LOSE AND BY WHAT MARGIN THAT COUNTS. WHAT MATTERS IS DOES THIS CATALYZE THE COMPANY TO IMPROVE ITS PERFORMANCE? AND IF IT DOES, THEN THERE'S A FUTURE FOR SHAREHOLDER ACTIVISM. IF COMPANIES CAN JUST DISMISS THE ARGUMENTS THAT MAJOR SHAREHOLDERS MAKE ABOUT THEIR UNDERPERFORMANCE RELATIVE TO COMPETITORS, ABOUT LOSING MARKET SHARE, THOSE THINGS CAN BE DISMISED, THEN CAPITALISM IS IN A VERY, VERY BAD PLACE. AND I THINK THE EVIDENCE YOU GIVE. I THINK NELSON'S STORY IS A PERFECT ONE. LOOK AT DUPONT, HE LOST THE PROXY CONTEST. WHY? BECAUSE SOME OF THE BIG INDEX FUNDS VOTED AGAINST HIM, AND -- AND, YOU KNOW, WITHOUT THE SUPPORT OF THOSE MAJOR FUNDS, IT'S VERY DIFFICULT TO BEAT -- THE INDEX FUNDS CONTROL AMERICA. ALRIGHT, THE INDEX FUNDS ARE GOING TO BE THE SWING VOTE IN EVERY PROXY CONTEST IN EVERY ELECTION.

WAPNER: YES, AND YOUVE MADE THE POINT CRITICALLY IN THIS PARTICULAR SITUATION THAT THERE IS SUCH A SMALLER SHAREHOLDE CONTINGENT THAT YOU THINK IT COULD TURN THE BALANCE OF THIS PARTICULAR VOTE. THE INDIVIDUAL SHAREHOLDER.

ACKMAN: THE MITIGATING FACTOR, A LOT OF THOSE ACCOUNTS ARE MANAGED ACCOUNTS AND A LOT OF MANAGED ACCOUNT PROVIDERS PERFORM ACCORDING TO GLASS LEWIS OR ISS. SO AND DEPENDING ON THAT PERCENTAGE, IT CAN MAKE A DIFFERENCE I WOULD SAY THE PROXY ADVISER AND THE INDEX FUNDS CONTROL AMERICA, AND IT'S VERY IMPORTANT TO GET IT RIGHT.

WAPNER: LET ME ASK YOU ABOUT HERBALIFE BEFORE WE TAKE A QUICK BREAK.

ACKMAN: SURE.

WAPNER: YOU REVEALED JUST LAST WEEK ON "SQUAWK BOX" YOU HAVE SORT OF RESTRUCTURED THE POSITION. IT NOW EXISTS ENTIRELY IN PUTS. WHY DID YOU DO THAT?

ACKMAN: SO, HERBALIFE IS SORT OF AN INTERESTING SITUATION WHERE WE'VE BEEN ENTIRELY RIGHT ON THE FACTS, ON THE REGULATORY ISSUES, ON THEIR RIPPING OFF CONSUMERS, ON THEIR MISLEADING PEOPLE.

WAPNER: WELL I MEAN, ACCORDING TO YOU YOU'VE BEEN RIGHT.

ACKMAN: NO, NO, NO ACCORDING TO THE FTC – THE FTC'S CONCLUSIONS ARE PRECISELY IDENTICALLY WHAT WE'VE SAID ABOUT THE COMPANY.

WAPNER: THEY DIDN'T SAY THE COMPANY WAS A PYRAMID SCHEME.

ACKMAN: BUT THE FTC SAID THE COMPANY WAS TANTAMOUNT TO A PYRAMID SCHEME AND FORCED THEM TO FUNDEMENTALLY RESTRUCTURE THEIR BUSINESS. WHAT WE SAID WAS – THAT WOULD CAUSE THE COMPANY, THAT WOULD HAVE AN IMPACT ON THE COMPANY'S FUNDAMENTALS. AND YOU SAW THAT IN THE LAST QUARTER: U.S. BUSINESS DOWN 17%, YOU KNOW, MEXICO DOWN 9% CHINA DOWN 3%. YOU KNOW, DECLINING IN ALMOST EVERY MARKET IN THE WORLD TOPLINE DOWN 3% OR 4%. THE GUIDANCE NEXT YEAR DOWN $4.60 TO 5 BUCKS. THIS COMPANY EARNED ABOUT 4.50 IN 2012 WHEN WE SHORTED THE STOCK OR 2013 WHEN WE SHORTED THE STOCK. SO WE'VE BEEN ENTIRELY RIGHT ON THE FUNDAMENTALS BUT THE STOCK HAS GONE FROM 48 TO TODAY 66. AND BY THE WAY, THAT'S NOT A TERRIBLE SHORT IN A BULL MARK OVER THE LAST FIVE YEARS, JUST TO POINT THAT OUT. AND WHAT'S HELD BACK – WHY HAVEN'T WE WON AS A SHORT SELLER? AND THE ANSWER IS THE COMPANY HAS RETIRED 30% OF THE OUTSTANDING SHARES AND CARL ICAHN HAS BOUGHT 23% OF THE OUTSTANDING SHARES. AND IN THE SHORT TERM OR EVEN INTERMEDIATE TERM, SUPPLY AND DEMAND MAKES A DIFFERENCE. AND WHAT THE, AT HERBALIFE, WHAT THE FOCUS OF ALL INVESTORS WAS, "BILL HAS HAD A BIG SHORT POSITION, HE'S GONNA BE FORCED TO COVER. SO THE MORE WE CAN PUSH THE STOCK PRICE UP, WE'LL MAKE IT INEVITABLY, HE HAS TO COVER." AND WHAT WE DID IS WE CONVERTED OUR POSITION FROM BEING SHORT THE STOCK TO OWNING PUTS. SO WE'RE NEVER GOING TO BE FORCED TO COVER ANY MORE. AND NOW THE DYNAMIC IS ALL ABOUT THE FUNDAMENTALS OF THE COMPANY. AND SINCE WE DID THAT THE STOCK WAS 78, 79 WHEN WE DID THE CONVERSION, THE STOCK TODAY IS 66. PART OF THAT IS, ONE, INVESTORS REALIZING THIS IS NO LONGER ABOUT BILL BEING FORCED TO COVER BECAUSE WE'LL NEVER BE FORCED TO COVER. AND TWO, THE FOCUS IS ON THE FUNDAMENTALS. AND AS THE FUNDAMENTALS DETERIORATE, THERE'S ONLY SO MUCH STOCK THEY CAN BUY BACK. THEY BORROWED $1.5 BILLION TO BUY BACK STOCK, THEY SPENT HALF THAT MONEY. THEY HAVE 1 BILLION 150 OF MATURITIES COMING UP, YOU KNOW IN, A YEAR AND A HALF. THEY HAVE ANOTHER 1.5 BILLION COMING UP BACK UP IN TWO AND A HALF YEARS. SO THEY'RE GONNA HAVE A CURRENT OBLIGATION OF 1 BILLION 150. YOU KNOW, IF I WERE THEY I WOULDN'T BE SPENDING ALL OF MY AVAILABLE MONEY BUYING BACK STOCK. BUT MY POINT IS, THEY ARE LEVERING UP, THEY'RE BUYING SHARES, THEY'RE DOING EVERYTHING THEY CAN DO TECHNICALLY TO DRIVE THE STOCK PRICE UP, BUT AT THE END OF THE DAY THE FUNDAMENTALS WILL RULE AND BECAUSE OF ALL THE SHARE REPURCHASES, IT'S A VERY SMALL FLOAT IN THE STOCK, SO IT'S -- AS HARD AS IT IS TO BUY THE STOCK, IT'S ALSO THAT HARD TO SELL THE STOCK. AND SO IF I WERE FORCED TO COVER I COULD PUSH THE STOCK PRICE UP. I'M NO LONGER FORCED TO COVER. IF INVESTORS ACTUALLY DECIDE THEY WANT TO SELL BECAUSE THE FUNDAMENTALS ARE BAD, IT'S EXTREMELY DIFFICULT TO SELL WITHOUT PUSHING THE STOCK PRICE DOWN. WHICH IS WHY IT'S COME DOWN 16% IN THE LAST WEEK OR SO.

WAPNER: THERE'S A DIFFERENCE, YOU WOULD ADMIT, BETWEEN A SLOWDOWN IN THE BUSINESS. WHICH MAY OR MAY NOT BE TEMPORARY, NEITHER ONE OF US KNOW BECAUSE WE'RE NOT RUNNING HERBALIFE, NOR ARE WE INSIDE THAT BUSINESS. BUT THAT'S A FAR CRY, ISN'T IT, FROM THE BUSINESS BEING A FRAUD AS YOU SAID?

ACKMAN: NO. NO, IT'S NOT A FAR CRY AT ALL. THE REASON WHY THEIR BUSINESS IS STRUGGLING THERE ISN'T FUNDAMENTAL DEMAND FOR THE PRODUCT AND THEY HAVE TO HOODWINK PEOPLE IN ORDER TO BUY IT. I MEAN, NO CONSUMER GOODS PACKAGED COMPANIES HAS THEIR SALES GO UP DRAMATICALLY AND FALL DRAMATICALLY IN EVERY MARKET THEY ENTER. WHICH IS THE BEHAVIOR THIS COMPANY OVERTIME.

WAPNER: YOU'RE NOT GOING TO CHANGE YOUR VIEW?

ACKMAN: I ONLY CHANGE MY MIND WHEN THE FACTS CHANGE. THE FACTS HAVE BEEN 100% CONFIRMATORY IN THAT SITUATION. AND I THINK IT WILL TURN INTO A NICE INVESTMENT FOR US AFTER A VERY LONG PERIOD OF TIME.

WAPNER: IS THIS THE FIRST AND FINAL STEP OF YOU THROWING IN THE TOWEL?

ACKMAN: BY THE WAY, THERE'S NO THROWING IN THE TOWEL. SO, A FEW THINGS, BUT I'VE NOT THROWN IN THE TOWEL, BUT ONE THING IS FOR SURE. THIS IS THE LAST TIME I'M GOING TALK ABOUT THIS COMPANY. SO – I'M WRITE A LITTLE LETTER TO INVESTORS TALKING ABOUT OUR -- SUMMARIZING THE FACTS. NOW THAT IT BECOME A RELATIVELY SMALL POSITION, I WANT US TO STEP OUT OF BEING THE FOCUS OF THIS SITUATION. I WANT ALL OF THE FOCUS TO BE ON THE FUNDAMENTALS OF THE COMPANY. SO THIS IS -- CALL THIS THE LAST TIME I'M EVER GONNA TALK HERBALIFE.

WAPNER: LAST TIME EVER YOU'LL TALK ABOUT HERBALIFE ON TELEVISION?

ACKMAN: LAST TIME EVER, EVER. EVER IN MY LIFE. THIS IS IT, DONE. THERE YOU GO, THE WORLD WILL BE A BETTER PLACE.

WAPNER: THEORETICALLY THE PUTS COULD EXPIRE AND YOU JUST WALK AWAY QUIETLY NOW.

ACKMAN: THAT COULD HAPPEN. THAT COULD HAPPEN.

WAPNER: WHEN ARE THEY DATED?

ACKMAN: THAT WE DON'T DISCLOSE.

WAPNER: WE'LL TAKE A BREAK AND COME BACK.

ACKMAN: SURE.

WAPNER: BRING IN THE GANG.

ACKMAN: THANK YOU.

WAPNER: WE'RE BACK ON "HALFTIME." BILL ACKMAN OF PERSHING SQUARE. ALSO WITH US, JOE TERRANOVA, JOSH BROWN, STEVE WEISS AND JIM LEBENTHAL. LET'S TALK ABOUT CHIPOTLE, BILL, IF WE COULD.

ACKMAN: SURE.

WAPNER: THE SHARES GOT CRUSHED AGAIN LAST WEEK ON EARNINGS. WHAT MAKES YOU STILL CONVINCED THAT YOU CAN THIS THING AROUND?

ACKMAN: SO, WE'RE EARLY. WE JOINED THE BOARD IN THE LAST YEAR. AND WE'RE GONNA WORK HARD TO MAKE IT – HELP THE COMPANY TURN. BUT THERE'S WORK TO DO. FOR SURE.

WAPNER: THAT'S A SHORT ANSWER.

ACKMAN: THE SHORT ANSWER IS GO TO THE STORES, THERE ARE PLENTY -- THERE'S STILL LONG LINES, PEOPLE BUYING THE PRODUCT, THE STORES ARE STILL DOING 2 MILLION IN REVENUE. 2 MILLION IN REVENUE, CONCEPT, IS A GREAT CONCEPT. NOW THEY WERE DOING 2.5 MILLION IN REVENUE BEFORE THEY HAD THEIR VARIOUS ISSUES THEY HAD. BUT I THINK THE ISSUES THEY'VE HAD ALL ADDRESSABLE THROUGH BETTER OPERATIONS AND BETTER OVERSIGHT.

WAPNER: I MEAN, IN FULL DISCLOSURE, AND SINCE WE HAVE SOME OF THE GANG HERE TODAY. JOSH, YOU'VE BEEN NEGATIVE ON CHIPOTLE STEVE, YOU'VE BEEN NEGATIVE ON CHIPOTLE, SUGGESTING THERE'S NO REASON WHY THIS STOCK CAN'T CONTINUE TO GO LOWER.

JOSH BROWN: I LOVE THE – AND BY THE WAY, I LOVE THE RESTAURANT. I JUST THINK THERE WAS A MAGIC ABOUT THE COMPANY, AND – AND SOMETIMES THE MAGIC WEARS OFF, AND ONCE IT WEARS OFF, THEN PEOPLE SAY, "OKAY IT'S A QUICK SERVICE RESTAURANT. WHY AM I PAYING 30 TIMES EARNINGS FOR IT? WHY DOES IT HAVE A GROWTH MULTIPLE IF IT'S NOT GROWING? ET CETERA." SO I DON'T THINK IT'S NOT SAVAGEABLE, IT'S THIS THING WAS LOOKED AT LIKE "OH, MY GOD ITS THE NEXT McDONALD'S" BY A GENERATION OF INVESTORS, RIGHT, FROM 06. I DON'T THINK ANYONE THINKS THAT ANYMORE.

ACKMAN: THAT'S WHEN IT WAS AT $700 AND SOMETHING A SHARE.

BROWN: RIGHT.

ACKMAN: TODAY PEOPLE ARE LOOKING AT – I MEAN, LOOK AT McDONALD'S. McDONALD'S HAS CERTAINLY HAD ITS CYCLES OF PEOPLE REALLY LOVING IT, PEOPLE HATING.

BROWN: YES, THAT'S TRUE.

ACKMAN: AND TODAY THEY ARE IN LOVING IT MODE.

BROWN: THAT'S TRUE.

ACKMAN: LOOK AT BURGER KING. BURGER KING WAS THE DOG OF ALL RESTAURANT COMPANIES. YOU KNOW, WE'RE A MAJOR SHAREHOLDER OF BURGER KING, WE HELPED TAKE THE COMPANY PUBLIC AGAIN. WHEN 3G BOUGHT IT AND TOOK IT PRIVATE AT A 30% PREMIUM, AN SAME-STORE SALES DECLINING – I THINK SAME-STORE SALES HAD DECLINED FOR EACH QUARTER FOR THE PREVIOUS THREE YEARS WHEN THEY BOUGHT THE BUSINESS AND THEY HAVE MADE MAGIC WITH BURGER KING. SO I THINK HERE THE COMPANY HAS BEEN – THE STOCK WAS 500 AS THEY ARE MAKING PROGRESS THEY HAD ONE EMPLOYEE SICK IN A STORE. A BUNCH OF PEOPLE GOT SICK AND EVERYONE THREW THE THING OUT. THE STOCK IS DOWN 50% FROM THAT KIND OF NEAR RECENT HIGH THIS IS STILL A GREAT CONCEPT.

BROWN: IT'S MORE THAN THAT. THEY DIDN'T HAVE TO SPEND MONEY ON MARKETING THE WAY THEY NOW HAVE TO SO THAT WON'T BE GREAT FOR MARGINS LONG TERM. THERE WAS A TIME WHEN THE ONLY AD THEY NEEDED WAS THE LINE OUT THE DOOR AND THEY HAD THAT FOR YEARS.

ACKMAN: YEAH BUT THERE'S LOTS OF OTHER WAYS – WHAT'S INTERESTING FOR CHIPOTLE AND ONE OF THE REASONS WE'RE INVOLVED, IS NOT BETTING ON A RECOVERY FROM THE FOOD SAFETY ISSUE. IT'S THAT THIS IS ONE OF THE LEAST OPTIMIZED OF THE QUICK SERVICE RESTAURANTS. RIGHT?

BROWN: NO DRIVE-THRUS. NO BREAKFAST. NO MOBILE-APP. I'M WITH YOU.

ACKMAN: NO BREAKFAST, NO MOBILE APP WHERE YOU CAN – THE LINES. STAND IN FRONT OF A CHIPOTLE TODAY, THERE'S STILL LINES. PEOPLE SEE THE LINE AND THEY GO SOME PLACE ELSE.

STEVE WEISS: BUT HOW MUCH ARE YOU PAYING FOR THAT IN THE CURRENT MULTIPLES? FORGET ABOUT WHAT THE STOCK'S DONE. THAT DOESN'T REALLY MATTER. WHAT MATTERS IS WHAT HAVE THE EARNINGS DONE AND THAT'S THE VALUATION? AND IF, 30 TIMES NEXT YEAR GIVEN THE BENEFIT THAT THEY HIT THEIR TARGET FOR ONCE, FIRST TIME IN THREE YEARS.

ACKMAN: YEAH.

WEISS: IT'S STILL VERY EXPENSIVE IN A COMPETITIVE SPACE.

ACKMAN: THE PROBLEM -- THE OPPORTUNITIES IN THE STOCK MARKET ARE CREATED BECAUSE MOST INVESTORS ARE FOCUSED ON WHAT NEXT YEARS EARNINGS ARE GOING TO BE AND WHAT'S AN APPROPRIATE MULTIPLE. AND FOR A STORY LIKE THIS ON, WHERE A COMPANY HAS BEEN THROUGH WHAT THEY HAVE BEEN THROUGH AND SALES GONE FROM 2.5 MILLION TO 2 MILLION, THE RIGHT WAY TO LOOK AT ARGUMENT IS NOT TO PUT A MULTIPLE NEXT YEAR. YOU'RE LIKE, OK, WHAT'S THE REASONABLE TRAJECTORY FOR A RECOVERY AND WHAT WILL THE EARNINGS BE TWO YEARS OUT, FOUR YEARS OUT, SIX YEARS OUT AND THEN DISCOUNT THOSE EARNINGS BACK IN TIME. AND ON THAT BASIS THEY ARE A VERY CHEAP STOCK IF THEY CAN PERFORM. IF YOU CAN MAKE A RECOVERY FROM A FOOD SAFETY CRISIS, WHICH ALMOST EVERY FAST FOOD COMPANY HAS BEEN ABLE TO MAKE A RECOVERY, AND TWO, IF YOU START LAYERING IN THINGS LIKE, YOU KNOW, ONLINE ORDERING, BREAKFAST, LONGER HOURS, YOU KNOW JUST HAD THEIR FIRST DRIVE-THRU. THERE ARE LOTS OF DIFFERENT WAYS –

BROWN: IN 2006 WHEN THEY SPUN OUT OF McDONALDS, DID THE IPO, THERE WERE NO REAL COMPETITORS ON A NATIONAL BASIS THAT WERE DOING VERY FRESH MEXICAN FOOD. THAT IS OBVIOUSLY NOT THE LANDSCAPE TODAY.

ACKMAN: ACTUALLY THERE AREN'T COMPETITORS ON A NATIONAL BASIS.

BROWN: YOU DON'T FEEL LIKE DEL TACO IS A LEGITIMATE COMPETITOR? QDOBA? I MEAN THESE ARE HUGE CHAINS GETTING BIGGER AND ARGUABLY FEASTING OFF A CONCEPT THAT CHIPOTLE REALLY CREATED.

WEISS: AND OTHER CONCEPTS. IT'S NOT JUST LIMITED TO COMPETING AGAINST OTHER MEXICAN—

ACKMAN: CAN I – TAKE A LOOK AT BURGER KING. WHEN BURGER KING DID THEIR TURNAROUND YOU DON'T THINK THERE WAS COMPETITION IN THE HAMBURGER SPACE?

BROWN: DID THEY TURN IT AROUND OR DID THEY SHRINK THE SIZE OF THE FOOD AND REALLY JUST FOCU MORE ON SHAREHOLDERS THAN --

ACKMAN: NO. LOOK AT SALES PER BOX. UP 30% OR MORE FROM WHERE THEY WERE, LOOK AT QUALITY OF THE STORES, LOOK AT THE INTERNATIONAL GROWTH OF THE BUSINESS.

BROWN: BURGER IS CROWDED AND IT'S STILL WORKING.

ACKMAN: IT'S NOT A CROWDED SPACE. ARE THERE TACO PLACES IN EVERY COMMUNITY? I'M SURE THERE ARE OTHER TACO AND MEXICAN CONCEPTS. BUT IT'S VERY ARE DIFFICULT TO DO WHAT CHIPOTLE HAS DONE AT A 2,300 UNIT SCALE. AND BY THE WAY, WE HAVEN'T EVEN TALKED INTERNATIONAL. THEY'VE DONE NOTHING INTERNATIONALLY. SO THERE ARE LOTS OF DIFFERENT LEVERS THAT CAN WE PULLED TO MAKE THEM A BETTER COMPANY. THE GOOD NEWS IS, WE STEPPED IN AFTER THE PROBLEMS HAD TAKEN PLACE. THEY INVITED US ON TO THE BOARD OF DIRECTORS. WE HAD A PRIVATE MEETING LIKE SCOTT KEEPS TALKING ABOUT IN THE CASE OF ADP AND THEY WELCOMED THE INPUT FROM US AND WE PUT TWO DIRECTORS ON THE BOARD INCLUDING THE FORMER CFO, MATT PAUL, FROM McDONALDS, WHO WAS AT McDONALDS WHEN THEY INCUBATED CHIPOTLE SO -- ITS AN EMINENTLY FIXABLE COMPANY.

BROWN: GIVEN THE HEALTH ISSUES, DOES THIS REALLY SCALE? 'CAUSE ISN'T THE PROBLEM THEY ARE TRYING TO DO FRESH FOOD IN A FORMAT THAT THE OTHER CHAINS HAVE LOOKED AT AND SAID, "WE REALLY CAN'T DO THAT IN."

ACKMAN: YES. AND THEY PUT IN PLACE VERY GOOD AND THEY'RE GETTING – MAKING EVEN TIGHTER THE LATEST ISSUE THEY HAD WAS NOT AN ISSUE OF THE SUPPLY CHAIN PROBLEM. IT WAS AN ISSUE OF A SICK EMPLOYEE WHO CAME INTO WORK AND THEY DIDN'T IDENTIFY, THE MANAGERS DIDN'T IDENTIFY –

BROWN: WHICH COULD HAPPEN ANYWHERE.

ACKMAN: IT COULD HAPPEN ANYWHERE.BUT BECAUSE IT'S CHIPOTLE IT GET ATTENTION. I MEAN, WHEN CHIPOTLE ISSUES WERE HAPPENING, THERE WAS A STORY IN THE PRESS THAT THERE WAS FECAL MATTER IN THE ICE CUBES AT, YOU KNOW, I WON'T MENTION THE HAMBURGER CHAIN. BUT PEOPLE LARGELY IGNORED IT, BUT BECAUSE THIS IS CHIPOTLE AND WHERE THE FOCUS IS.

BROWN: GET BACK TO THAT MINIMUM WAGE ISSUE THAT WE TALKED ABOUT.

ACKMAN: THE MAGIC CAN COME BACK BY THE WAY, McDONALDS, BURGER KING.

BROWN: THAT'S –

ACKMAN: JACK IN THE BOX.

BROWN: SO THAT'S WHY THEY WERE THE FOCUS – THEY HAVE A SOCIAL MEDIA PRESENCE, YOUNG PEOPLE FETISHISIZED IT.

ACKMAN: PEOPLE STILL LOVE THE CHAIN. ASK MY DAUGHTER.

BROWN: THAT'S WHY THEY PAID FOR IT IN BAD PUBLICITY.

ACKMAN: MY DAUGHTER IS THE MILLENIAL CUSTOMER, PEOPLE STILL EAT THERE. THEY STILL LIKE IT.

BROWN: I'M NOT A MILLENIAL BUT MY STOMACH IS. AND I STILL LIKE THE FOOD.

WAPNER: I THINK WE'VE KILLED THAT ONE. LET ME ASK YOU WE'VE KIDDED, JIM, ON OCCASION.

JIM LEBENTHAL: THAT'S WHAT YOU'RE CALLING TO CALL IT? I WOULD CALL STEAMROLLED.

WAPNER: WE'VE RIDICULED JIM ABOUT HIS INVESTMENT WHICH IS NO LONGER AN INVESTMENT IN JC PENNEY. YOU OBVIOUSLY HAVE A HISTORY THERE. LET'S LOOK BROADER RETAIL THOUGH.

ACKMAN: YEAH.

WAPNER: YOU'VE MADE MANY RETAIL INVESTMENTS OVER THE YEARS.

ACKMAN: A HANDFUL, ACTUALLY.

WAPNER: MANY, A HANDFUL. WHAT ARE WE— NO, WE'VE ONLY MADE A FEW INVESTMENTS. A HANDFUL.

BROWN: I WOULD SAY SEVERAL.

WAPNER: OKAY, YOU'VE MADE A HANDFUL OF RETAIL INVESTMENTS OVER THE YEAR, BETTER?

ACKMAN: YES.

WAPNER: OK, SO THROUGH YOUR EYES, WHAT DO YOU SEE WHEN YOU SEE RETAIL TODAY?

ACKMAN: I SEE RETAILERS THAT HAVE TO ADAPT. I STILL THINK THEY WILL BE –

WAPNER: WHY AREN'T YOU SHORT RETAILERS?

ACKMAN: WE SHOULD HAVE BEEN. WE'RE NOT REALLY SHORT BIG SELLERS. IT'S NOT WHAT WE DO THEY HAVE TO ADAPT BUSINESS. IF YOU'RE SELLING A COMMODITY PRODUCT WHICH IS LESS CONVENIENT THAN ORDERING ON AMAZON, YOU'RE DEAD, BUT IF YOU CAN CREATE SOMETHING NEW. SO ONE OF THE THINGS WE'RE DOING AT HOWARD HUES CORPORATION, WE'RE GONNA OPEN THE SOUTHPORT SEA PORT NEXT YEAR, IT'S GONNA BE AN INCREDIBLE RETAIL VENUE, BUT IT WILL STORES THEY DON'T HAVE ANYWHERE ELSE, WE HAVE A STORE, 10 CORSO COMO, THE OTHER STORE IS IN MILAN. RIGHT? AND IF YOU TALK TO PEOPLE WHO ARE INTERESTED IN FASHION, IT'S NOT JUST CLOTHING. RIGHT? THEY HAVE ART AND BOOKS AND -- AND, YOU KNOW, A COMPLETELY INTEGRATED UNUSUAL EXPERIENCE THAT BRINGS IN CUSTOMERS AND UNIQUE MERCHANDISE YOU CAN'T GET ANYWHERE ELSE AND YOU CAN'T BUY ON AMAZON. THOSE KIND OF CONCEPTS ARE GOING TO DO VERY WELL. THE OTHER THING WERE DOING AT SEAPORT, THIS IS AGAIN, OWNED BY HOWARD HUGHES CORPORATION, WE'LL HAVE A LOT OF ENTERTAINMENT AND FOOD AND DRINK. PEOPLE STILL WANT TO COME TOGETHER YOU KNOW, AND YOU KNOW, RETAIL USED TO BE ABOUT KIND OF CONVENING PEOPLE. BUT THERE'S NO REASON TO GO BUY YOUR UNDERWEAR AND WALK INTO MACY'S TO DO IT.

WAPNER: BUT THAT'S THE POINT YOU'RE MAKING IS THAT'S WHAT IT TAKES? THAT'S WHAT YOU HAVE TO DO? THE WHISTLES?

ACKMAN: IT TAKES INNOVATIVE CONCEPTS.

WAPNER: EVERYTHING UNDER ONE ROOF TO GET PEOPLE –

ACKMAN: YOU HAVE TO MAKE AN EXPERIENCE THAT PEOPLE ARE EXCITED ABOUT PARTICIPATING IN. PEOPLE DON'T WANT TO GO TO A BIG BOX DEPARTMENT STORE ANYMORE.

BROWN: SO THAT'S WHAT VORNADO DID, KEPT THE FIFTH AVENUE STORES AND GOT OUT OF MALLS AND RETAIL AND THE IDEA IS LIKE, IF IT'S NOT AN EXPERIENCE ITS JUST A TRANSACTION. THAT DOESN'T NEED TO TAKE PLACE IN SOMETHING THAT WE OWN. I THINK THAT'S THE RIGHT VIEW SO I DEFINITELY AGREE.

WEISS: BUT IT'S THE EXPENSE THAT GOES UP FOR THE REAL ESTATE COMPANY, NOT FOR THE RETAILER, ALTHOUGH EVENTUALLY I'M SURE IT WILL BE FELT IN THEIR BOTTOM LINE DEPENDING ON HOW THEY CHARGE THE RENT SO IT'S STILL, WHETHER IT'S A PERCENTAGE OF THEIR GROSS OR THEIR PROFITS. SO IT STILL MAKES IT PRETTY DICY BECAUSE YOU'LL HAVE TO FIGURE OUT, OKAY, SOMEBODY WILL COME IN THERE. THAT'S A TOURIST AREA, RIGHT? NOBODY IS GOING THERE – IT'S A SHOP YOU'RE MAKING IT A DESTINATION PLACE. BUT HAVING THOSE UNIQUE PRODUCTS THERE, YOU'RE BETTING ON UNIQUE TASTES TO COME AND DO IT. RIGHT?

ACKMAN: YOU'RE TALKING ABOUT SEAPORT? OR GENERALLY?

WEISS: I'M TALKING ABOUT SEAPORT SPECIFICALLY BUT I'M TALKING ABOUT ELSEWHERE.

ACKMAN: IT'S NEW YORK CITY, IT'S FOOD, RIGHT. WHAT ARE PEOPLE -- RIGHT NOW WE'RE BUILDING A BUILDING ON THE PIER. IT'S OUT ON THE PIER.

BROWN: RIGHT, I WAS OVER THERE OTHER DAY.

ACKMAN: IT'S UNBELIEVABLY SPECTACULAR. ONE OF THE PROBLEMS WITH

MANHATTAN IT'S AN ISLAND YET IT'S SO HARD TO GET TO THE WATER. SO THE SEAPORT IS ONE OF THE FEW PLACES YOU CAN LITERALLY SIT AND HAVE A DRINK OVERLOOKING THE WATER OVERLOOKING THE BROOKLYN BRIDGE JOHN GEORGE IS DOING A RESTAURANT, DAVID CHANG SOME RESTAURANTS THERE, THERE'S GONNA BE A FOOD HALL AKIN TO A HARROD' FOOD HALL AND IT WILL DRIVE CONTINUAL DEMAND FOR NEW YORKERS. PUT AISDE, AND THEN ESPN JUST TOOK 19,000 SQUARE FEET AND THEY'RE GONNA BROADCAST, INSTEAD OF HAVING A STUDIO, NO DISRESPECT IN ENGLEWOOD, NEW JERSEY— YOU GUYS SHOULD HAVE MADE THAT DEAL.

WEISS: WE MADE SEVERAL GOOD ONES IN THE CITY, WE'RE GOOD.

ACKMAN: ESPN USED TO BE TO HAVE TO DRIVE OUT TO CONNECTICUT TO GO INTERVIEW.

BROWN: BUT THAT'S THE POINT. IF YOU WANT TO HIRE TALENT, IT'S GOT TO BE IN THE CITIES AND THEN ALSO PEOPLE HAVE TO WANT TO TAKE SELFIES OF THEMSELVES AT THESE PLACES. IT'S NOT JUST EXPERIENCES IT'S GOT TO LOOK GOOD THE SEAPORT IS A GREAT SETTING.

WEISS: TO SPECIFICALLY MAKE MONEY, TO BUY THE RETAILERS IS STILL VERY DICY. WHAT YOURE TALKING ABOUT I DON'T KNOW HOW YOU PLAY IT FROM THE RETAIL STANDPOINT.

BROWN: BUY HOWARD HUGHES CORP.

ACKMAN: I WOULD BET THERE ARE CONCEPTS STARTED IN THE LAST SIX MONTHS THAT WILL BECOME MAJOR RETAILERS, BUT THEY HAVE THE BENEFIT OF STARTING WITH A BLANK SHEET OF PAPER, AND ITS VERY HARD TO TAKE A MACYS, RIGHT, WHICH HAS HAD A HUGE FIXED ASSET AROUND THE COUNTRY STUCK IN A BUNCH OF MALLS AND TURN IT INTO INCREDIBLY INNOVATIVE RETAIL.

WAPNER: FOR SOMEBODY WHO MADE ONE OF THE GREATEST TRADES EVER IN GGP, GENERAL GROWTH PROPERTIES, DOES THE MALL EXIST FIVE YEARS FROM NOW?

ACKMAN: YES.

WAPNER: IN WHAT FORM?

ACKMAN: IT IS GOING TO HAVE DIFFERENT TENANTS IN TEN YEARS AND FIVE YEARS FROM NOW. THINK ABOUT WHAT A MALL IS. A MALL IS 100 ACRES AT THE INTERSECTION OF THE TWO MOST IMPORTANT HIGHWAYS IN A PARTICULAR COMMUNITY A LOT OF MALLS ARE NOT LOCATED IN NEW YORK CITY LOCATED IN THE MIDWEST AND YOUR CHOICES FOR CONVENING PEOPLE IS NO LONGER A TOWN SQUARE. THERE MAY BE CHURCH BUT BEYOND THAT THERES NO PLACE TO GET TOGETHER AND HANG OUT WITH OTHER PEOPLE SO THE MALLS WILL ADAPT TO BECOMING PLACES WHERE PEOPLE GET TOGETHER TO MEET OTHER PEOPLE, TO SEE OTHER PEOPLE, BUT ITS GOING TO BE MORE FOOD AND ENTERTAINMENT AND INNOVATIVE CONCEPTS TIED TO, YOU KNOW, AN INTERNET BACK END.

WAPNER: YOULL BE GENERATING YOUR REVENUE THROUGH THE OTHER AREAS RATHER THAN GOING TO BUY A PAIR OF JEANS OR SUIT.

ACKMAN: YOU CAN PROBABLY – PEOPLE STILL LIKE -- THERES STILL ELEMENTS OF SHOPPING THAT PEOPLE LIKE A MOM AND DAUGHTER GOING TO SHOP TOGETHER IS STILL A THING THAT MOTHERS AND DAUGHTERS LIKE TO DO, BUT YOU HAVE TO MAKE IT SOMETHING WHERE ITS A UNIQUE EXPERIENCE BEYOND WHAT YOU CAN ORDER ON THE INTERNET.

WAPNER: DO YOU WORRY WHEN YOU LOOK AT NAMES AND IM NOT TALKING NECESSARILY FROM AN INVESTMENT STANDPOINT, THE JC PENNEYS AND MACYS AND NORDSTROMS, THEY THEMSELVES WONT EXIST THE WAY THEY DO RIGHT NOW A HANDFUL OF YEARS FROM NOW.

ACKMAN: I THINK YOU HAVE TO WORRY ABOUT THAT AND THEY WILL HAVE TO ADAPT VERY, VERY QUICKLY. I MEAN GOING BACK TO RON JOHNSON AT JC PENNEY RON HAD THIS VISION YEARS AGO HE SAID LOOK, WE HAVE TO ADAPT AND HAD GREAT IDEAS ON HOW TO TAKE THAT REAL ESTATE AND MAKE IT INTERESTING BUT THOSE IDEAS COST A HUGE AMOUNT OF CAPITAL AND HE WAS RELYING ON THE CASH FLOWS OF THE OLD CUSTOMER TO SUPPORT A NEW BUSINESS. THAT'S A VERY, VERY DIFFICULT THING TO EXECUTE, AND IT MAY NOT BE THE CURRENT OWNER OF THE MALL THAT GETS THE BENEFIT. MAYBE THAT THE MALL GOES BACK TO THE BANK GET SOLD TO SOMEONE ELSE AT A MUCH LOWER PRICE AND THAT PERSON HAS THE ABILITY TO MAKE DEALS WITH DIFFERENT TENNANTS SO I THINK -- PEOPLE ARENT GOING TO STOP SHOPPING THEY WONT STOP GOING TO, YOU KNOW, MALLS. IT'S STILL GOOD REAL ESTATE FROM A LOCATION POINT OF VIEW, BUT YOUVE GOT TO GET RID OF THE KIND OF COMMODITY OR THE – YOU KNOW, THE SEARS, JC PENNEY, MACYS MALL IS DONE, IN MY VIEW.

LEBENTHAL: SEARS IS PROBABLY, YOU KNOW, I HATE TO SAY, IT FIRST QUARTER OF 18 IS KIND OF DO OR DIE WHEN THE HOLIDAY SEASON NUMBERS COME OUT. THERES PAPER OUT THERE THAT'S LESS THAN A YEAR IN MATURITY THAT YIELDS 25%. IM JUST CURIOUS JOSH AND I HAVE HAD SOME ARGUMENTS ABOUT WHETHER THE BONDS ARE TELLING YOU ANYTHING IM CURIOUS WHETHER YOU HAVE AN OPINION ABOUT WHAT THAT SAYS ABOUT SEARS.

ACKMAN: SEARS, AGAIN, THE SAME ISSUE. THEY HAVE A HUGE FIXED ASSET BASE INVESTMENT IN SEARS TODAY IS NOT A BET IN MY OPINION ON SEARS THE RETAILER IT IS BET ON OF THE ASSETS OF THE COMPANY WHICH INCLUDE LONG-TERM LEASES AND REAL ESTATE.

BROWN: THEY ARE NOT IN THIS COMPANY THOUGH THEY ARE IN IT SERITAGE.

ACKMAN: A LOT OF THOSE ASSETS ARE STILL LEFT IN THE SEARS COMPANY.

WEISS: BUT THEY ARE ENCUMBERED.

ACKMAN: DO THE ASSET VALUE OF THOSE ASSETS EXCEED THE LIABILITIES LESS WHAT THIS WILL COST AS THIS WINDS DOWN?

LEBENTHAL: BOND PRICES ARE SAYING NO.

ACKMAN: I HAVENT STUDIED SEARS IN A LONG TIME BUT I THINK THAT'S THE BET.

WAPNER: HOW DO YOU VIEW AREAS LIKE TECHNOLOGY ARTIFICIAL INTELLIGENCE? THE AREAS THAT ARE CHANGING THE WAY WE EVEN THINK ABOUT THE FUTURE OF BUSINESS AND INNOVATION AND EMPLOYMENT OR WORKFORCE? THE ECONOMY AT LARGE?

ACKMAN: A GREAT SEGUE, TO THIS COMPANY ADP, WHERE THERES A VOTE TOMORROW.

WAPNER: HEARD ABOUT THAT ONE.

ACKMAN: YOU THINK -- WHAT IS ADP? YOU KNOW, IT'S AT RISK OF BEING THE MACYS OF 20 YEARS AGO YOU KNOW, SUCH A DOMINANT COMPANY. HAS THE BEST ASSETS AND THE BEST LOCATIONS. HOW -- CAN YOU ENVISION A SCENARIO WHERE MACYS DOESN'T EXIST? THE ANSWER IS TECHNICALLY DRAMATICALLY CHANGED THE LANDSCAPE. WHAT WERE TRYING TO MAKE SURE DOESN'T HAPPEN AT ADP IS THAT TECHNOLOGY DOESNT DRIVE THE COMPANY OUT OF BUSINESS AND IN THEIR -- THERES ALREADY EARLY INDICATIONS OF THAT IN THEIR ENTERPRISE BUSINESS, 1,000-PLUS CUSTOMERS, CUSTOMERS LIKE WORKDAY AND ULTIMATE SOFTWARE THAT HAVE ADAPTED. THEY USE TECHNOLOGY TO BETTER TAKE CARE OF THEIR CUSTOMER AND THEY WIN A LOT OF MARKETSHARE.

BROWN: TAKE THE SMALLER CUSTOMER -- SO YOU SAY LIKE TRI-NET. WE DONT CARE ABOUT THESE GUYS THEY ARE TALKING A 50-PERSON FIRMS AND ALL OF A SUDDEN THE 50-PERSON FIRMS HAVE GROWN UP ON ANOTHER PLATFORM THAT'S THE RISK FOR EVERY COMPANY IN OUR ECONOMY RIGHT NOW.

ACKMAN: AS THE OWNER OF ANY BUSINESS TODAY YOUVE GOT TO TAKE TECHNOLOGY RISK INCREDIBLY SERIOUSLY. DOESNT MATTER WHAT YOUR TOTAL SHAREHOLDER RETURN HAS BEEN FOR THE LEFT 10 OR 20 YEARS, DOESN'T MATTER THAT YOUVE PAID A DIVIDEND FOR THE LAST 20 YEARS THESE ARE COMPLETELY BACKWARD LOOKING THINGS, RIGHT. AND LOOK AT KODAK. INCREDIBLY DOMINANT MARKET SHARE. DIDNT TAKE DIGITAL PHOTOGRAPHY SERIOUSLY, AND DIGITAL PHOTOGRAPHY OR ITS EQUIVALENT, YOU KNOW, AMAZON AND RETAIL OR WORKDAY IN THE PAYROLL BUSINESS, IN THE HUMAN CAPITAL MANAGEMENT BUSINESS, THESE ARE THE THINGS SHAREHOLDERS NEED TO BE ON THE LOOK FOR AND THIS IS WHY ACTUALLY SHAREHOLDER ACTIVISM IS INHERENTLY A GOOD THING BECAUSE THE ACTIVIST HAS A HUGE SENTIVE BY VURTUE OF OFTEN BEING OFTEN A LARGE SHAREHOLDER OF THE COMPANY TO SOUND THE ALARM AND SAY, HEY, MANAGEMENT, WAKE UP. SO WHAT IF THE STOCK WENT UP OVER THE LAST THREE YEARS SO I THINK YOULL SEE ACTIVISM AT SUCCESSFUL COMPANIES THAT STILL HAVE OPPORTUNITIES AND RISKS THAT NEED TO BE ADDRESSED.

WAPNER: YOU THINK ACTIVE MANAGEMENT IN GENERAL IS GOING TO HAVE A RENAISSANCE AFTER SOME PRETTY TOUGH YEARS?

ACKMAN: SO I DON'T THINK THE STOCK MARKET -- THE S&P 500 CAN'T COMPOUND AT 15% FOREVER. THAT DOESN'T WORK. THE MATH DOES'T WORK. SO AT SOME POINT INDICES GET OVERVALUED IN ERMS OF THE UNDER INDEXED ASSET YOU KNOW, AND THAT WILL HELP CREATE A RENAISSANCE FOR ACTIVE MANAGERS.

WAPNER: WHEN YOU LOOK AT STOCK MARKET NOW, AND MAYBE YOU'RE LOOKING APT YOUR NEXT TARGET, ARE THINGS TOO EXPENSIVE AT THE CURRENT VALUATION IN THE STOCK MARKET?

ACKMAN: WE INVEST IN VERY, VERY FEW THINGS IF I HAD TO INVEST IN THE MARKET GENERALLY, IT'S HARDER FOR US. AND WE'RE ACTUALLY BUILDING A STAKE IN SOMETHING NEW. AND I THINK IT'S A CHEAP STOCK. SO THERE'S STILL STUFF TO BE FOUND.

WAPNER: YOU'VE JUST INVESTED IN SOMETHING NEW.

ACKMAN: STILL IN THE PROCESS. YEAH. NEXT YEAR'S PROXY CONTEST. NO. THIS TIME WE'LL HAVE PLENTY OF NOTICE BEFORE THE MEETING.

WAPNER: BUT I MEAN, FOR SOMEBODY WHO HAS READ BEN GRAHAM, WHO GOES TO WARREN BUFFETT'S ANNUAL MEETING AND -- AND CONSIDERS HIM THE LEGEND, OBVIOUSLY, A VERY SPECIAL PLACE I KNOW FOR YOU, YOU STILL THINK VALUE INVESTING IS THE -- IS THE PLACE THAT YOU CAN MAKE MONEY?

ACKMAN: SURE.

WAPNER: AMID SERIOUS QUESTIONS ABOUT THE VIABILITY THAT HAVE PARTICULAR AREA? AND DID YOU READ DAVID EINHORN'S RECENT LETTER?

ACKMAN: YEAH, I DIDN'T READ THE LETTER BUT I SAW ARTICLES ABOUT IT. BUY SOMETHING AT A DISCOUNT TO WHAT IT'S WORTH IS THE WAY YOU SHOULD INVEST YOUR MONEY. NOW THE MISTAKE PEOPLE MAKE SOMETIMES IS UNDERESTIMATING THE RISK OF TECHNOLOGICAL ENTRANTS, RIGHT? SO IT MAY LOOK CHEAP BASED ON HISTORY. IT MAY LOOK CHEAP BASED ON NEXT YEAR'S EARNINGS. BUT VALUE OF A BUSINESS IS THE PRESENT VALUE OF THE CASH OVER ITS REMAINING LIFE, AND IF THERE ARE TWO GUYS IN A GARAGE WORKING ON SOMETHING THAT'S GONNA DISRUPT THAT BUSINESS YOU HAVE TO TAKE IT SERIOUSLY.

BROWN: SO PHILOSOPHICALLY, I THINK THIS IS THE QUESTION MOST PEOPLE WOULD LOVE TO ASK YOU.

ACKMAN: WHAT DO YOU THINK OF BITCOIN?

BROWN: NO, GIVEN WHAT YOU JUST SAID, AND I THINK IT'S REASONABLE STATEMENT, THERE'S CHEAP AND THEN THERE'S CHEAP FOR A REASON IF YOU DON'T THINK ABOUT WHAT THE FUTURE IS. DO YOU EVER THINK LIKE THE BENEFIT OF PUBLIC STOCKS IS THAT THEY ARE LIQUID? YOU CAN BUY THEM AND SELL THEM.

ACKMAN: MM-HMM.

BROWN: BUT THEN WHEN YOU GET REALLY HIGH CONVICTION ON SOMETHING AND TABLE-POUND AND DO POWERPOINTS WITH HUNDREDS OF SLIDES, YOU TURN A LIQUID ASSET, YOU TRANSFORM IT INTO AN ILLIQUID ASSET BECAUSE THERE ARE REASONS WHY YOU CAN NO LONGER GET OUT. EITHER YOU'VE CONVINCED – NOT YOU, BUT THE COLLOQUIAL YOU, YOU'VE EITHER CONVINCED YOUR INVESTORS THAT YOU HAVE TO STAY IN AND EVERYONE IS WRONG, AND THEN WHEN YOU WANT TO CHANGE YOUR MIND OR TECHNOLOGICAL CHANGE IS INTRODUCED INTO A SECTOR, YOU CAN'T. SO THE QUESTION IS THERE SUCH THING AS TOO MUCH CONVICTION?

ACKMAN: SURE, SO THIS IS – IN ORDER TO BE A SUCCESSFUL INVESTOR YOU HAVE TO HAVE – THE BEST INVESTMENTS ARE THE ONES –

BROWN: HOW DO YOU KNOW THE RIGHT AMOUNT OF CONVICTION, I GUESS IS WHAT I'M ASKING?

ACKMAN: LET ME PUT IT THIS WAY. IF YOU'VE BEEN HUMBLED RECENTLY, IT HELPS TO KEEP THINGS IN

BALANCE. I THINK THAT'S A VERY HELPFUL THING. BUT INVESTING IS ABOUT HAVING A -- THE DELICATE BALANCE BEING BETWEEN CONFIDENT ENOUGH TO KNOW THAT YOU'VE DONE YOUR HOMEWORK SO

THAT YOU'RE RIGHT AND THE REST OF THE WORLD IS WRONG. RIGHT? THE GGP EXAMPLE THAT YOU GAVE, THE STOCK AT 34 CENTS, PEOPLE ARE SAYING IT'S AT ZERO, RIGHT? IT'S BASICALLY AT ZERO. BUT WE'RE SAYING, THIS COMPANY CAN GO BANKRUPT AND MAKE A HUGE RECOVERY FOR SHAREHOLDERS, WHICH IT HAS. AND EVEN WITH THE STOCK DOWN AND IN THE RECENT ENVIRONMENT THERE'S 100+ RETURN FOR THE INVESTORS. BUT YOU HAVE TO BE HUMBLE ENOUGH TO RECOGNIZE WHEN THE FACTS ARE DIFFERENT THAN THE ORIGINAL THESIS. AND OUR FAILURE, AND THE BIG LOSS WE TOOK ON VALIANT WAS WHEN NEW FACTS CAME OUT IN THE Q3 OR Q4 OF, YOU KNOW, WHERE MANAGEMENT HAD KEPT SECRET THIS FILL ORDER THING, WHEN WE LEARNED ABOUT SOME MASSIVE INCREASES IN DRUG PRICES, WE -- WE TOO READILY ACCEPTED MANAGEMENTS ANSWERS TO CONCERNS WE HAD AND, YOU KNOW, WE TOOK HUGE LOSSES AS A RESULT. THIS VERY DELICATE BALANCE BETWEEN RELYING ON WHAT MANAGEMENT SAYS, FROM THAT EXPERIENCE I ONLY RELY ON EMPIRICAL DATA.

BROWN: YOU NEVER FEEL THAT YOUR SHAREHOLDERS, YOU SAY LIKE, "I'VE BEEN TELLING THESE PEOPLE TO BELIEVE ME ON THIS IT'S ALMOST IMPOSSIBLE AT THIS POINT TO SAY I'M WRONG OR I CHANGED MY MIND.

ACKMAN: WE CHANGED OUR MIND – WE CHANGE OUR MIND ALL THE TIME. ONE OF MY BEST SALES—

BROWN: THAT'S HOW YOU SURVIVE. RIGHT?

ACKMAN: BEST SALES, JC PENNEY

BROWN: TEN BUCKS.

ACKMAN: AT $13 A SALE, 12.90. WE SOLD IT.

WEISS: THE BIG DANGER IS WHEN CONVICTION CHANGES THE INTO STUBBORNNESS. AND WE HAVE SEEN IT IN MANAGERS ALL THE TIME, THEY DON'T KNOW THEY ARE GETTING STUBBORN AND PERHAPS THAT'S WHAT HAPPENED ON VALIANT AND MAYBE THAT'S WHAT HAPPENED ON PENNEY.

ACKMAN: ACTUALLY PENNEY, THERE'S NO STUBBORNNESS. WE EXITED WHEN THE FACTS CHANGED.

WEISS: I WOULD ARGUE THE FACTS CHANGED A LOT BEFORE THAT. YOU JUST WEREN'T SEEING THE CHANGE.

ACKMAN: I WAS ON THE BOARD FOR NINE MONTHS. SO THERE IS –WHEN YOU JOIN A BOARD OF DIRECTORS –

WEISS: THAT'S LIMITING

ACKMAN: IT IS LIMITING AND YOU HAVE TO THINK SERIOUSLY ABOUT IT. IF WE LOSE TOMORROW, THE BENEFIT IS YOU GET TO PUT ALL THIS PRESSURE ON THE COMPANY FROM THE OUTSIDE AND RETAIN COMPLETE FLEXIBILITY ON OUR INVESTMENT. I JOINED THE BOARD AND AGAIN, IT'S ANOTHER REASON FOR SHAREHOLDERS TO VOTE FOR US. RIGHT? YOU GET 8% BENEFICIAL HOLDER ON THE BOARD OF DIRECTORS OF THE COMPANY, WE'RE GONNA WORK REALLY, REALLY HARD. AND I CAN'T JUST CHANGE MY MIND 90 DAYS OUT.

WAPNER: WE GOT TO GO. THANKS FOR BEING HERE.

ACKMAN: THANKS FOR HAVING ME.

WAPNER: WE WILL SEE HOW IT SHAKES OUT TOMORROW. BILL ACKMAN, JOINING US EXCLUSIVELY HERE ON CNBC.

For more information contact:

Jennifer Dauble
CNBC
t: 201.735.4721
m: 201.615.2787
e: jennifer.dauble@nbcuni.com

Emma Martin
CNBC
t: 201.735.4713
e: emma.martin@nbcuni.com

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