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Carl Icahn CNBC Interview “very dangerous”

Carl Icahn CNBC Interview at Delivering Alpha conference BELOW ARE VERY ROUGH NOTES

“You look at the environment, and I think it’s very dangerous. You’re walking on a ledge and you might make it to the end, but you fall of that ledge and you’re really going to see trouble,” he said Tuesday at the Delivering Alpha conference presented by CNBC and Institutional Investor.

You’ve got a country that are obsessed with deficits.

You need to so something about productivity in this country.

These money managers are doing terribly bc some of them are smart enough to be hedged. It doesn’t mean that you made a lot of money that your’e smart. I admit that. A lot friends of mine on wall st, it ell them if you’re’ so rich how come you’re not smart?

What I’m saying is it doesn’t necessarily mean that i’m nec wrong,… you really gotta be very cautious. It doesn’t mean they’re net short… i make more money ironically if it goes up a little bit more

I’m net long

I can’t tell you if trump gets elected if the stock market is going up or down.

If you look ahead 4 or 3 years, if Donald Trump gets elected the economy will be a  lot better than if Hillary Clinton gets elected.

The gov shouldn’t run things bc they’re not trained to run things.. Ir really don’t blame Jenna McCabe for screwing this up (EPA) – same with charter schools.

Carl Icahn on Bill Ackman

I don’t think we’re back at it. I take a little affront umbrage when i saget the right for Herbalife to buy up to 30%. Then i’m reading that Ackman is saying i’m a market manipulator

Maybe he did me a favor and got it down 10 points for me. Maybe  id want to buy it…

Asked to go to the next question when asked about him wanting to sell herbalife

My point is they make good products

No professional would really want to be short a company where you got 92 million shares outstanding and 28  short and out of those 92 i own 19 or 20%… i’ve asked permission, gone to SEC?, for right to go to 50%, which is going way up, i only have right to go to 35%

Ackman loves to think i’m going away…

Herablife – gave him gas didn’t like it.

More from CNBC’s unofficial transcript of the event with a focus on Herbalife.

SCOTT WAPNER: Let me ask you about the name you mentioned just a short time ago: Bill Ackman. Because, two years ago, we sat on this very stage in this room, and you guys hugged it out.

CARL ICAHN: I remember it well.

SCOTT WAPNER: As do I.

CARL ICAHN: We hugged?

SCOTT WAPNER: You did. It was a little awkward hug, but it was a hug.

CARL ICAHN: I think I tripped on the steps.

SCOTT WAPNER: Now you guys are back at it. What happened?

CARL ICAHN: I don’t think we’re back at it. I really don’t believe that. I mean, he said a few things about — look, I take a little affront, umbrage, when I say — I get the right from Herbalife to buy up to 35%. I get the right, and then I read that Ackman’s saying I’m manipulating the market. I’m a manipulator because I said I wanted to buy the 35% and I didn’t really mean it. So I said, well, okay. And then I bought the 2.5 million shares just recently. And he says — I don’t know what he said about that. You talk to him; I don’t talk to him.

SCOTT WAPNER: You were mad — correct me if I’m wrong — that he went on our network, on CNBC, and said that you were getting out because you believe that Herbalife was, quote, toast.

CARL ICAHN: You want me to tell you the honest truth? I’m not joking. I wasn’t there. I wasn’t really there.

SCOTT WAPNER: You just bought more than 2 million shares that day just for a goof?

CARL ICAHN: Well, it was down 10 points, wasn’t it?

SCOTT WAPNER: Because they thought you were getting out.

CARL ICAHN: Well, maybe he did me a favor and got it down 10 points. You ever think of that? Maybe I did want to buy it. Maybe he was wrong.

SCOTT WAPNER: You did consider getting out.

CARL ICAHN: Is that a question or a statement? Because, you know, I’m not going to answer it.

SCOTT WAPNER: Maybe it’s a little bit of both.

CARL ICAHN: Go to the next question.

(Laughter.)

SCOTT WAPNER: Why do you continue to believe in that business after the settlement with the FTC raises a number of serious questions about where that business could potentially be years from now?

CARL ICAHN: Look, the FTC was involved, in my opinion, because of Ackman. Pure and simple. He got that senator to go in and get them going. That’s my opinion on that. But then I don’t know. I’m — actually, the FTC, when I look at regulatory agencies, by and large, I think they’ve done a pretty good job by and large on things. So I’m not here to argue about what they did. I think they took maybe too long in looking at this company. I honestly will tell you that I think that they know — or maybe they’re not saying it — that we never were and we’re not a pyramid scheme. We make a real product.

A pyramid scheme is I give you this little pencil, then you get three other guys to sell pencils. And it’s all bullshit. And that’s not true here. We make a product; people eat it. But the interesting thing about Herbalife is — the irony is, that Ackman is wearing this white hat, he says, and I’m trying to save these poor women that do this thing. And that’s their only livelihood. They’re out there. They have their friends. And the friends go and they drink this drink. And you can say it’s no good — I’m not going to — but I will say they make some good products, I believe.

I personally don’t like the drink. I drank it. It gave me a lot of gas. I didn’t like it.

(Laughter.)

CARL ICAHN: But a lot of people love the damn drink. And I drink this vitamin C, this vitamin thing every morning. And I haven’t got a cold since I’ve been drinking it. I’ve been doing it for two years, put it in the thing, drink this stuff. Okay. My point to you is they make good product. One.

Two, there is something to this last mile concept. There are people — when I was a kid, I was 14, I was always working. I sold Fuller brushes. You knock on doors. Some people like it. Some people slam the door in your face. And you go to your friends. And the friends buy the Fuller brushes from you.

And that’s what these people do. And they make a living from that. And some people make a great living from it. Now, did they go too far, some of the salespeople go too far, the distributors, and say how you could have a Mercedes Benz? I don’t know. But the real issue is that these people have jobs and are working because there is a model in our society where everything is going to be bought on the Internet.

And, by the way, our retailers don’t personally sell you. There is a model for personal sales. And the irony — here’s the question for Ackman too, that, you know, with it all, the sales in the United States are only, I think, 15 — not even 20%. So it’s only 20%. United States, I think, will do fine. I think there are regulations. And some of those regulations in an ironic way are maybe good for Herbalife because we’ve spent all the money and the technology to police them. We already spent it. Some of the smaller sales operations companies are going to have trouble. So it might even be good.

Then let’s go outside of the United States, where this model really works. You know, China, first quarter was up 36% over a year ago. And I think second quarter, 14. It’s choppy. I mean, it’s going to be down and up. But it’s still going up. And that’s going around the world. So you’ve got a model that I think works. And if I’m wrong, I’m wrong. I’m not here to sell Herbalife. But I am telling you that I’m not just playing games buying the stock.

I think it works. I could change my mind. But I would tell you this, that I also looked, because I’m a market specialist, as I told Janet McCabe’s secretary, and I think I know markets. And as far as I’m concerned, I think — I don’t want to say it in a bad way about Ackman, but no professional would really want to be short a company where you got 92 million shares outstanding and 28 million short. And of those 92, I own 20%. I’ve said I’ve got permission to go to 35%. And here’s a little secret for your show, that I’ve asked permission — I’ve gone to the FTC to get accelerated treatment for the right to go to 50%, up to 50%, which is going way up. I only have the right to go to 35 —

SCOTT WAPNER: Up to 50%?

CARL ICAHN: Well, you have to do levels. And we went. And if you think I’m fooling, I mean, maybe you don’t think it’s a lot of money, but I came from the streets of Queens. I had to give them $280,000 to waive the accelerated approval. So that’s not out, but it will be out anyway. So I’m telling it to you.

So Ackman loves to think that I’m going away. But how do you go out on TV and say what a man thinks to someone else? I mean, you want me to tell you what you think? I mean, you like the girl walking down the street. And your wife calls me up, what the hell did he say that for? I think it’s absurdity.

So I think that tells you something. Now, the 92 million shares outstanding against the short position, 28 million, I don’t think that Jim Chanos or any professional short seller will touch it with a 10-foot pole. And I sure wouldn’t touch a company like that unless it was really on the verge of bankruptcy. And even then, why do you do it when I’d say — even today, 28% of it is closely held. So you got 92 million, take away 30 million, you got 60 million floating out there.

What if somebody does a tender offer. I mean, I’m just saying it comes up. Now, I’m not saying anybody is doing a tender offer, but I’m saying this is why I look at things technically too.

SCOTT WAPNER: Would you do a tender offer?

CARL ICAHN: Is that a question?

SCOTT WAPNER: Yeah. Did you hear how it ended up? Offer? Offer?

CARL ICAHN: I would consider it. I don’t mean — now, I got my lawyer sitting out there somewhere. This is not a 13D thing, because I certainly have not made — I don’t have any stated intention to do it. But there again, it’s something I’ve thought about. Doesn’t mean I will. And I think there are other people that might. I think Herbalife is certainly a candidate to go private.

In fact, frankly, wearing my Shell Oil hat, I think Herbalife is a lot better off private and getting away from this type of Ackman-type criticism. I mean, you know, Ackman is out there driving everybody crazy, which, you know, is his right to do. He’s obsessed with this. And don’t get me wrong. I think Ackman’s a smart guy. I think he’s just obsessed and gets obsessed. And when you’re an investor, and a good investor — you said something before. When you’re angry.

If you’re a really professional investor, you can’t get angry. It’s like looking at a tennis match. You think Djokovic got angry or — a great player doesn’t get angry. He studies it. You know, they have this whole thing about that. And I don’t want to get into it more than that. But I am saying to you that what I will tell you —

SCOTT WAPNER: He might not get angry, but he might try to get even.

CARL ICAHN: Well, he won’t get even if he gets angry. I’m just telling you that — not against another pro. If you’re watching tennis guys, I mean, they get angry, they got no chance to win. You can’t do that.

SCOTT WAPNER: No, I hear you. You said — and you said it on January 25th of 2013 on CNBC — that this could be the mother of all short squeezes. It sounds — January 25, 2013.

CARL ICAHN: See, you got a good memory. It’s like what I said when I think about “Danger Ahead.” So now you’re saying I’m wrong because it hasn’t been the mother of —

SCOTT WAPNER: No. I’m saying I’m wondering — are you laying out the case and laying out a scenario by which that would come true?

CARL ICAHN: Yeah, look, I don’t want to be here telling you in any way, shape, or form you should run out and buy Herbalife because that could happen. But I said it before. And if you’re asking me why I said it, I’m telling you why I’ve said it. Because — and I’m looking at the numbers today — that it is, I think — and, again, I think Ackman’s smart, but I think in this case it’s absurd to have a major short position. And then it gets more technical if you want — so you have a lot of derivatives out there. But those derivatives translate into shorts by the people that sell the derivatives.

And they’re not in to lose because they don’t care about Herbalife. They probably don’t even know what they do really. These guys do derivatives. I’m not knocking them; that’s what they do. They’re all mathematical, real smart guys. So they do a derivative and sell — and short some stock against it and all that stuff.

So they have it in their contract, I would assume, that if anything like that hits, like a tender or anything like that, they want the thing out, their contract is torn up, I think. Now, I’m not — I’m just telling you, when you get into this kind of a business and you’re a professional, you got to do your work. And, honestly, in the case of —

SCOTT WAPNER: Yeah, he did a lot of work. He did a lot of work.

CARL ICAHN: Can I tell you, I don’t agree with that. Can I tell you that? Now, I’m not — I really hate to get into this because I really think he’s a smart guy. And, in a strange way, I know you going to not believe it, a year ago, at the tennis match, I talked to him. I know you don’t believe it. I sort of liked him. He’s sort of a —

SCOTT WAPNER: I did believe it.

CARL ICAHN: I sort of like him. I think he’s smart. But the real issue is, I think he put a lot of credence, when he first did it — I know one, shall we say, didn’t do what he thought he’d do. And he didn’t go out at that conference and talk about how bad Herbalife was. And I think Ackman was shorted, so Ackman then decided I think it’s bad. He read this report by — I think the Indigo Girls or something.

And you know what? It’s a big report. So I think I’m one of the few guys — and I really believe Ackman being smart, I can’t believe he really read the report. Because I read it, and it was hogwash on my part. And it’s not what a professional report should be. I’m not mad at them, but how can anybody really know the intricacies of a company like that?

And so I remember reading it. I spent three hours reading it. I said bullshit. That’s why I bought it. Now, I will admit to you, at that point, I was mad at Ackman, I will say. So I — but I didn’t buy it because I was mad at Ackman. And I might not have read the report if I wasn’t mad at Ackman. I think about that. And that’s possible.

But that doesn’t mean I did it because I was mad. In fact, I was helpful. I read it because I was thinking, hmm, I’m mad at Ackman, he’s got a little trouble here, why don’t I read the report and see what’s going on? Because, you know, guys that don’t like it were calling me up and saying why don’t you go buy the stock? And I was thinking, oh, I’ll take a look at it. When I read it, I said, this is complete nonsense, this report.

Carl Icahn
Carl Icahn Image source: YouTube Video Screenshot

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