Bill Ackman On SPAC Structure And Hedging

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CNBC excerpts: First on CNBC: Pershing Square Capital Management CEO Bill Ackman speaks with CNBC’s “Squawk Box” today, discussing SPAC structure and hedging.

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Following are excerpts from the unofficial transcript of a FIRST ON CNBC interview with Bill Ackman, Pershing Square Capital Management CEO, on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Wednesday, July 22. Following is a link to the video on


Ackman On SPAC Structure

We're taking no compensation, no management fees, incentive fees, promotes we're not buying cheap stock. There's literally no compensation to the sponsor. The sponsor in this case is not us personally, either. It's the Pershing Square funds. So, we've set this up to create an investment opportunity for the Pershing Square funds. And our investors of which the employees of purging are the largest. We own about 23% of the purchase where funds are indirectly investing. And we set up an alignment that was very appealing to investors. We created the most investor friendly SPAC in the world. And we had an enormous reception that gave us the ability to do very large scale.

Ackman On SPAC

That's why having a cash shell, where someone can instantaneously raise $5 billion and being an offensive position and accelerating the growth of their business or deleveraging their company is a really good opportunity. It's that uncertainty that creates the opportunity for what we're calling Pershing Square tontine holdings.

Ackman On SPAC Model

We're committing a billion, a billion and a half, possibly more of our own capital. Every investor in the U.S. back as a full right to redeem. Meaning, if you don't like the deal, you get your money back with interest. So the idea of a lead investor, you know, looking for throughout the world to find the highest quality, best business on the best terms negotiating a transaction, committing capital, and only then do investors get presented with the detailed information they need to make a decision and they have a full opt out. The typical process IPO is announced, you know, several days, it's a scramble.

Ackman On Big Tech

What a crisis does is it advantages some businesses and harms others. And you know, Amazon, you know, I think I even mentioned it in my interview on the 18th, I think is an enormous beneficiary. And we scrambled to do the work on Amazon and you know, our bad for missing. So we don't own any of the great high flying tech companies. You know, whether or not they justify their valuations is a more complicated analysis and it takes time. But you know, everyone who was sitting home that ordered from Amazon for the first time, you know, becomes a long-term customer and this has been an enormous. They've been an enormous beneficiary. I actually bought a Tesla. It's a great car.

Ackman On Masks

The sooner that everyone in America wears a mask when they're in a public place, okay, the more quickly the economy's going to recover.

Ackman On Being Cautious On Markets

I am cautious on markets over the next period of time. And we have today, you know, a short position in a high yield index. We are bearish on highly levered companies to some extent, I view that as a hedge on whether we make money on or not, but the highly levered businesses will struggle because it's going to take time for the economy to reopen. But we are about 80%. We're about 20% cash in our publicly traded entity and we're approximately 98% long. So, the entity itself has leveraged.

Ackman On The Markets

You know, the markets are a representation of the most successful, the largest, the best capitalized, the most dominant companies in the world. And unfortunately, the markets don't – there isn't a market for the private family owned business, right? And that markets down 80, 90 in some cases 100%.

Ackman On Hedging

We were, first of all, massively long the market, right? So we were 85% invested in stocks prior to with a hedge on. Okay. On March 12, we decided to take the hedge off. And we had, you know, liquidated 1.3 billion of the hedge when we invested 2 billion in the stock market in the six days before that interview. So we were $3.3 billion more long than we were on March 12, which took us to more than 100% invested. So, we were absolutely bullish.

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