CNBC Excerpts: Jim Chanos, Nelson Peltz and Keith Meister Speak with CNBC’s “Fast Money Halftime Report” Today
Following are excerpts from the unofficial transcript of CNBC interviews with Jim Chanos, Kynikos Associates Founder; Nelson Peltz, Trian Fund Management Founding Partner and Keith Meister, Corvex Management Managing Partner, on CNBC's "Fast Money Halftime Report" (M-F, 12PM-1PM ET) today, Wednesday, October 19th. Video of the interviews available on CNBC.com.
All references must be sourced to CNBC.
Jim Chanos, Kynikos Associates Founder
CHANOS ON TESLA:
TO ME THE KEY IS NOT DELIVERIES. IT'S PRODUCTION. THAT'S THE REAL PROBLEM HERE IS GETTING GEARED UP FROM THE MODEL S AND MODEL X, WHICH ARE DOING ABOUT 100,000, A LITTLE LESS, UNITS A YEAR, TO WHAT THEY HOPE FOR IS AN INITIAL RUN RATE OF 500,000 OF THE MODEL THREE. THAT'S AN ENTIRELY DIFFERENT KETTLE OF FISH.
CHANOS ON SOLAR CITY-TESLA:
I'M JUST DUMBFOUNDED AGAIN THAT THE BOARD, AS I MENTIONED AT DELIVERING ALPHA, THAT THE BOARD WOULD WANT TO GO AHEAD WITH THIS DEAL, BUT YET REFUSE TO LEND MONEY TO SOLAR CITY OVER THE SUMMER ON A SENIOR BASIS. WHAT DOES THAT TELL YOU ABOUT THEIR VIEW OF THE RISK IF THE DEAL GOES THROUGH? THIS IS JUST COMPLETELY PERPLEXING THEY'RE GROWING INTO A BIZ THEY DONT NEED TO GO INTO, SOLAR CITY IS NOT A HIGH TECH COMPANY ITS A ROOFER AND A CONSUMER FINANCE COMPANY. AND YET THEY ARE GOING TO PRETTY MUCH DOUBLING THEIR CASH BURN BY TAKING THIS ON, IT MAKES NO SENSE OTHER THAN TO, WE BELIEVE, BAIL OUT THE INSIDERS.
Nelson Peltz, Trian Fund Management Founding Partner
PELTZ ON THINGS NOT BEING SO BAD:
I THINK THAT YOURE GOING TO SEE A LITTLE GROWTH IN EUROPE THIS YEAR. I MEAN, FOR THE FIRST TIME. ITS NOT GOING DOWN ANYMORE. I DONT THINK THINGS ARE AS BAD AS PEOPLE WANT TO -- I DON'T KNOW WHY THE HELL THEYRE THINKING ABOUT HAVING AN INTEREST RATE HIKE. I DONT THINK WE NEED A STRONGER DOLLAR. I THINK THINGS ARE NOT NEARLY AS BAD, AND AS I SAID, I THINK THERES HUGE OPPORTUNITY ON THE COST SIDE.
PELTZ ON DON'T RAISE RATES:
I DONT THINK SO, BECAUSE WHO CAN AFFORD MORE INTEREST? I MEAN, THERES NOT A COUNTRY IN THE WORLD THAT CAN AFFORD MORE INTEREST. WE CERTAINLY DONT NEED ANY MORE INTEREST PAYMENTS. WHY MAKE THE DOLLAR STRONGER, SCOTT? IT DOESNT MAKE SENSE. YOU HEAR DONALD CONTINUE TO TALK ABOUT EXPORTS, EXPORTS. WHY MAKE IT MORE DIFFICULT TO HAVE EXPORTS?
PELTZ ON GE:
I THINK GE HAS GOT THE BEST SET OF INDUSTRIAL ASSETS ON THE PLANET. MOST OF THEIR REVENUE TODAY, I MEAN, 85%, 90% OF THEIR REVENUE TODAY IS SERVICE REVENUE. IF YOU LOOK AT THE BUSINESS, PEAK TO TROUGH THROUGH THE GREAT RECESSION, AND IF YOU LOOK AT THE BUSINESSES THAT ARE IN THERE TODAY, NOT THE BUSINESSES THAT WERE IN AND OUT, IF YOU PULL THOSE ALL ASIDE, PEAK TO TROUGH, EARNINGS WERE DOWN 5%. YOU TELL ME YOU FIND OTHER INDUSTRIAL COMPANIES THAT WERE DOWN ONLY 5% THROUGH THE GREAT RECESSION.
Keith Meister, Corvex Management Managing Partner
MEISTER ON YUM:
I'M THE LARGEST SHAREHOLDER OF YUM, AND YUM IS ABOUT TO COMPLETE THE SPINOFF OF ITS CHINA BUSINESS ON NOVEMBER 1ST. THEY'RE GOING TO SPIN OFF TO SHAREHOLDERS AND OWNERSHIP INTEREST IN CHINA, WHICH SHOULD REPRESENT ABOUT ONE-THIRD OF THE TOTAL VALUE. I TRULY BELIEVE IT'S AN EXAMPLE OF ONE PLUS ONE EQUALING MORE THAN TWO. I THINK WE'RE GOING TO HAVE TWO WONDERFUL BUSINESSES. THE CORE YUM REMAIN CO. WILL BE AT 98% FRANCHISED ASSET LIGHT BUSINESS THAT WILL BE IN THE BUSINESS OF GROWING ITS BRAND AND PROVIDING ITS BRANDS TO ENTREPRENEURS WHO WANT TO PUT CAPITAL BEHIND THOSE BRANDS TO OPEN AND OPERATE RESTAURANTS. A PHENOMENAL ANNUITY LIKE BUSINESS WITH GROWTH. REALLY A UNIQUE ASSET. THE CHINA BUSINESS IS A VERY DIFFERENT BUSINESS, BUT AN EQUALLY GOOD BUSINESS. IT'S A WAY OF PLAYING THE CHINA CONSUMING CLASS.
MEISTER ON YUM TRADING:
YUM CHINA WILL GET SPUN OFF AND WILL NEED TO FIND A HOME. AND I WOULD ARGUE IT'S A BUSINESS THAT SHOULD TRADE AT 10 TO 12 TIMES EBITDA. RESTAURANT COMPANIES TEND TO TRADE AT THOSE KIND OF MULTIPLES THAT DON'T HAVE ANY GROWTH. LOOK AT POORER PERFORMING RESTAURANT COMPANIES IN THIS COUNTRY. THEY TRADE AT TEN TIMES. YUM CHINA HAS HUGE COMPETITIVE ADVANTAGE AND HUGE GROWTH. IT'S UNDER EARNING BECAUSE IT'S HAD SOME HICCUPS, BECAUSE THE CHINESE ECONOMY HAS NOT BEEN PERFECT.
MEISTER ON NELSON PELTZ:
I DON'T THINK NELSON NEEDS TO APOLOGIZE FOR BEING AN ACTIVIST. WHAT I MEAN BY THAT IS IT'S A WORD THAT'S BEEN PROLIFERATED BY THE MEDIA. WHAT DOES NELSON DO? HE INVESTS IN GREAT COMPANIES, WHEN THEY'RE GOING THROUGH CHANGE, PROBABLY WHEN THEY'RE OUT OF FAVOR AND HE SAYS, "I GET TO BUY A GREAT COMPANY AT A GOOD VALUATION. I CAN SELL THEM ON AN IDEA TO HELP," AND HE IS TRYING, PROBABLY, TO PICK GOOD COMPANIES, WHICH HE DOES, WITH GOOD MANAGEMENT TEAMS, WITH GOOD BOARDS THAT ARE LIKELY TO BUY INTO HIS IDEAS AND THEN OWN THEM FOR A LONG PERIOD OF TIME WHEN THEY GO AND EXECUTE ON THOSE IDEAS. THAT'S A PHENOMENAL WAY TO INVEST CAPITAL. HE IS ACTING LIKE AN OWNER IN THE PUBLIC MARKETS.
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