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tv   Fast Money Halftime Report  CNBC  April 2, 2015 12:00pm-1:01pm EDT

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around 3% range. >> and of course facebook on that citi upgrade. >> target goes from 91 to 97. looking at all sorts of reasons why. compound annual growth rate on revenue's going to be pretty good. on that note let's send it back to headquarters. have a great long weekend. here's wapner with the half. thanks so much. welcome to the halftime show. let's meet or staurting line-up for today. josh brown is the ceo of ridge holtz wealth management. pete and jon najarian, the co-founders of options monster. michael block chief strategist at rhino trading partners. paul richards head of fx and credit distribution at ubs. and dan greenhouse is btig's chief strategist. our game plan of the day looks like this. all bark no bite? do activist investors really get the big returns, do you think? some scathing criticism today from one person who says the numbers tell a different story.
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triad's nelson peltz begs to differ and joins us exclusively to respond. microsoft at 40. as the company marks the milestone are its best days ahead or is the software giant going gray a little too soon? we begin with stocks pushing higher, at least trying to ahead of the jobs report. made even more so by the fact the fed's getting closer to raising interest rates we think. and earnings season is just around the corner we know. sets up a good debate over which is more important to investors right now as the next catalyst for stocks. josh, what do you think? >> i think that's probably the issue that most people are most pessimistic about, is this is a down quarter for earnings. and more than that, factset is reporting that you've got 85 companies in the s&p that have given negative guidance for the first quarter earnings season that's coming up and you've only got 16 companies giving positive guidance and that is the worst skew. you have to go back to 2006 to find a quarter where you saw that much in terms of bad
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guidance. the good news is most of the reason for it is dollar or fx-related. it's not really companies coming out and saying hey, business is falling off a cliff. however, it's still going to weigh on people's minds. the optimist, though, scott, would say, well, this sets us up for a higher beat rate. you've got a lot of pessimism going in. you can kind of interpret data points like that as you like. but that's something that people are concerned about. >> pete, is this more a sell the rips market as this rally at least today fades or is it a buy the dips -- >> isn't it kind of both? >> maybe it is. maybe it depends what you're buying and what you're selling. >> and we are in this range. we've talked about this. whether you're talking about the volatility index being in the range. it gets underneath the 200-day moving average it's a buy. it starts getting up and purk above the 50 then you have to sell once again. it depends on what you're looking at right now, but the market setups -- i'll tell you the other thing that's really interesting is the volumes have just been absolutely awful this past three, four trading
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sessions. and actually in march they were off fairly significantly as well. i don't think you have to overread it either, scott. but you look at the oil, oil's in a range. oil stayed but basically between that 48-52. we had the dip under, popped right back und err why again. you pick out your area, whet it's the ten-year, whatever you want, they're all in somewhat of a range. you've just got to trade the range. it's giving it to us. >> greeny, i wonder if the companies are setting us up. expectations get slammed down as much as possible. and then they turn out to be not as bad as the numbers would suggest and then we rally on that. >> this game's been played for a long, long time. more than just the last year. it's been decades that companies have guided lower. that's why ultimately while everyone puts a lot of focus on the beat rate i think it's more or less an irrelevant metric. what really matters is the path for earnings and revenues, not whether they were better or less than analysts expected. i'll just jump off a point that josh made and reiterate, a lot
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of what's expected in the first half of the year and to some degree the back half of the year is not only dollar-related but energy related. and i know the point's been made but it bears repeating. if you exclude energy companies, s&p 500 earnings are going to be positive in the first and second quarter. >> doc, you put sort of everything into a blender. okay? a vitamix, a really strong one. and you mix it all up. do you get a smoothie or do you get sludge? >> no, you do have a smoothie. and i'm mad at greenhouse for not sending me his notes ahead of the interview so i could lift some stuff off of them, dan. i'm sorry about that. >> i apologize. >> but to your smoothie comment, judge, yeah, that's what we've got. that's why the new 10% correction is a 3 1/2% correction. it's also why when you and i talked about janet yellen and those fed notes we both said we're going under 2% here. we were just over 2%. so it's not like we're geniuses. but now we're at 1.855. i think we go back to 1.6,
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judge, on this. whatever happens with the jobs report tomorrow, whether or not we've overshot or undershot, i think that is not the issue. it's the issue, september is still when we're going to see the first -- >> so you're telling me we're -- we should be feeling pretty good. >> you should. >> but we're going to go to 1.6 on the ten-year? >> yeah. but it's not going to be because of the u.s. economy. it's going to be because of what global central banks are doing to their currencies and to their interest rates. ours are just going to look all that more attractive. and it's going to continue to draw dollars from the euros into dollars, from yen into dollars. they're coming in from all directions, judge. that's going to lift the bonds, in other words, push rates down. >> paul richards, weigh in. >> i don't even know where to start. >> i wanted you to -- >> the vitamix. >> look, the way i look at this, guys-s we've either got a smoothie or a sludge depending on payrolls tomorrow. and i think you're all somewhat
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being dragged in by this holiday mode right now. but listen, this time tomorrow we're going to know whether we've got a 300 number or a 250 number. gol goldilox or a big problem. the trend has been 2.95 on payrolls. if we get a 295 number, plus i think tomorrow's a 3 handle. and then things are going to really light up. because i don't think this market is ready for the sense that we could get a june hike from the fed. >> i know what you're saying. here we go again. good news is going to be bad news. >> i'm with you. that's exactly it. the problem is, guys, you're so equity focused you've got to look at the markets here. i think we're being dragged into complacency. i think the investor's thinking about the long weekend. europe is even around. what happens tomorrow if it's a 300 number? good news will be bad news, i think, scott. >> michael block. >> here's where i am. when i look at the short term, i'm in paul's camp here. i think the jobs number does matter more than earnings.
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and i do think it's going to be a strong number. what's that going to do? okay. good is bad. one man's smoothie is another man's sludge. whatever you want to say here. but really what this comes down to is i think we could see a nice sell-off early next week. if we're just looking at u.s. stocks we'll see what the future's doing in a limited time tomorrow. i'm going to view that as a buying opportunity. as i've been saying over and over again, i buy perceived hawkishness. if we get a down draft toward the lows for the year as we could on this good is bad premise, i'm buying u.s. growth on that because i still don't think the fed moves in june. i'm dubious they move this year even if we have a good jobs number. >> sxart of the reason, paul, you get 3,000 print tomorrow and as we're having this conversation i see a note. literally crossing now. that j.p. 340r7k taking their first quarter gdp estimate down to .6%. so the fed knows that the first quarter is looking loudy. it all depends where on the lousy scale the number comes in. >> ubs has revised to -- we're looking at 1% at present.
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it's looking forward. stop looking at q1. yellen and others are looking forward. and the reality is if we've got a payroll growth of 300,000 plus they're going in june and they'll go in october and probably in december. and that's why i made my argument all along. but it's predicated on a good employment number. >> let me just add real quick, we put out a note last week that brought our first quarter gdp number down to 1%, probably less, and i know there's another bank or two on the street that's close to zero. but let's not forget that for the entire recovery, first quarters have been a problem. it wasn't just last year. it was 2010. for some reason the winters have been bad, economic activity has been bad -- >> liesman was talking about that this morning. >> it's a point liesman's made -- that's right. liesman's made the point repeatedly. each time you've had a poor first quarter it's been the correct call, so to speak, to bet on a recovery. and i think, and i know a lot of my contemporaries also on the street think the right call will be to bet on a recovery again.
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>> but people are fading the move today. that's for sure, josh. >> hey, dan, do you think that the reason behind -- we've had these bad first quarters and then all of a sudden we're off to the races, do you think that housing plays a role there? because that's really the only industry i can come up with that's meaningful sizewise in the data that would say lrktsd the weather's terrible, people are kind of slowing down what they're doing and then all of a sudden they come back out, look for house, buy houses, build houses. is that what's behind that? >> that's fair. the poor housing data in first quarters has followed the weather, not obviously the other way around. but i think -- i want to amend my own point here and just note that q1 of this year is not the same as the last couple of years. the strength in the dollar is a meaningful difference in respect to past years. you could look last year, for instance, and it was clearly the weather. you knew with certainty that you would get -- fair certainty you that would debt a stronger level of growth the rest of the year. the strength of the dollar this
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year is obviously a different input into the equation. and while obviously the weather is not going to be the same in q2 as it was in q1, you really do need a cessation of dollar strength here to the extent that that's been weighing on exports, it's been weighing on corporate earnings, the speed at which the dollar's been accelerating heretofore unseen since the '70s you would need to see that cease at least to catch our breath here. >> that's why uncertainty may reign supreme. dan, thanks. paul, thanks to you as well. i'll talk to you guys in the coming days. coming up. are activist investors. joe sonnenfeld threw down the gauntlet. trian's partners' nelson peltz responds. it's coming up. plus it's microsoft's 40th birthday. take a look at the stock moves and payouts. is it a buy right now? plus oil moving lower on potential news from the iran talks. that and much more straight ahead on the "half."
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break out the party hats. light some candles, eat some cake. microsoft is turning 40 today. the stock's performance since its ipo in 1986, you can check that out. don chu is at the wall with a
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walk down memory lane through microsoft's 40 years. >> talk about wealth creation. because this is where it becomes kind of staggering sometimes. some of the reason why's -- one of the reasons why people still kind of look toward these ipo markets and find -- or try to find that lottery ticket because let's take a look at microsoft, at least from a non-adjusted perspective. all right? back in 1986 when this company first went public, stock, a share of stock at the ipo was 21 bucks a share. if microsoft had never split adjusted its stock, it just let it keep running, kept going here, that $21 share would not be worth $11,700 per share. that's just to kind of get you an idea of how much creation microsoft has done in terms of wealth. that means it's up 64,000% since that $21 ipo price. a huge move higher since 1986. it's had, though, nine stock splits, which helps to kind of create where we are right now in terms of the overall stock price and the market value of the
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company. and it does issue a quarterly dividend. one of the big payments of these dividends go into. here's the funny part of this, stock. this is where a lost investors tune toward these dividend-type investments. microsoft, according to microsoft, if you would have bought stock, 100 shares of stock at the closing price of the ipo date, because you couldn't get on the ipo, you would have gotten about $28 per share. if you would have factored in all the dividend payments, all the stock splits, everything else, that $2,800 investment for 100 shares is now worth about $1.7 million. at its record level it was up about $2 million. >> the numbers, they speak for themselves, right? you bring up the words wealth creation. and unfortunately more lately it's been wealth stagnation. right? >> this is true. if you take a look at the large cap technology sector overall, a
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lot of these gains we saw did come ramping up toward the height of the internet and tech bubble boom and then things really fell off and it's been trying to reclaim that territory since then. it hasn't been as much of a growth story in the last few years but still some investors would say that for the large cap technology story much of it is about the dividend payments because even if you hadn't gotten the -- there was still a reason to own the stocks. stocks like intel, oracle, or microsoft down the line. cisco. even cisco in some ways. they pay a dividend as well. maybe those dividends are a bigger part of the story at least for a certain part of the 234i69ing population. >> dom, good stuff. you've get the got the history with this stock. heather bellini over at goldman, she reiterated herself -- >> the same sell she's had on since 22, heather? she reiterated it at 28 as well. >> dang. >> i was going to say if she wants to play let's play. and you're a little frisky,
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judge, because i saw you this morning going back and forth with sonnenfeld. >> i know you have the history. and i know you've been critical of the goldman call. so i brought it up again. >> so which one of us was bashing heather, then? >> i don't have a view at all of the stock. >> cloud delivery of microsoft's products, whether it's word, whether it's excel or all the rest of it. you can go with google and google docs are wonderful, and a lot of people do. but an awful lot of people still pay microsoft and the delivery through the cloud, judge. that's one of the -- >> there's going to be a day when heather comes on. the goldman analyst -- >> i hope so. >> they barely do any interviews at all. but there's going to be a day. >> this stock was trading up to 47 previous to the earnings in january. then it pulled back. and on that pullback it hit right where it is right now, around 40.40. this stock is right where it had
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come from, scott. it gave up a lot of 4r569 year's gains. this is still a 40-plus dollar stock and to jon's point we're talking about one of the firms that's been negative on it since this stock was -- >> ran 60%. >> who's eye buyer of microsoft right here? >> i like it right here. i think this transition is going forward in a really big way. i like sattia adella. his leadership. 90 billion overseas. 3% dividend yield. this is a name you'd like to have. >> coming up, a very well-timed trade executed after a tweet is raising a lot of eyebrows. jon najarian heading to the telestrator next to break it down. then some harsh criticism of activist investors from yale's jeffrey sonnenfeld today. coming up, trian's nelson peltz weighs in with his response. it's an exclusive interview. you're only going to see it in one place. on this network, on this program. that's coming up next.
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cnbc's lawrence lewiton wrote up earlier this week. the anatomy of this trade,najar
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telestrator with more. i heard a lot of people talking about this thing tads. >> and you should, judge, because there's something going on here. one of them is man versus machine. and women versus machine, for that matter. can your finger click as fast as an algorithm can read? the answer is no. but let's look at what triggered it. intel is in talks to buy altera. and talks to buy is probably the key word here. that's probably what the bought if indeed it was an algorithm or a news reading bot that reacted to this, talks to buy altera. when you see, that somebody could react of course to that but it would take them several seconds. number one, to digest it, number two, to enter a trade. in the same second we saw trades going off 37 take a look at these. this is the 36 calls. look at these calls trading for 35 cents, skruj. the stock's basically 35 bucks a share give or take in that same second. by the way, you do see some
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pretty wide fluctuations in that same second. >> we're literally talking about a second worth of time. >> we're talking about a second. faster than that click right there. >> same thing. 37 calls. these were the large blocks. for instance, about 1,500 of these traded in large blocks and another 2,700 of the 36 calls trade td in large blocks. the stock immediately gapped up -- well, not immediately. it took several minutes, but it ran up, judge, to $45 a share. so if you're buying the right to buy a stock at $36 or 37 that pops to 45 that's worth $9 or $8, depending which of those strikes you pick, we figure about $3.6 million were made on those trades just like that. it exhausted all of the liquidity that there was offered in altera at that time. >> this seems more than a man versus machine conversation than necessarily an unusual activity
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discussion, correct? >> yeah. as far as unusual activity, you're absolutely right because the activity did not, repeat, did not proceed -- precede, rather, that post on twitter. but as soon as that post hit twitter, that's when the stock reacted, that's when the options reacted. and if you have the access to the markets in that millisecond or nanosecond even time frame, you were able to get in when the stock was down here at 35 bucks a share, and immediately that day it spiked up to 45. >> i just want to make the point it's not necessarily man versus machine because a man built the machine to run that program and execute trades based on those kind of keywords and that's something you that should get used to. i know of at least 20 different companies that are building and selling software that's doing things like that. >> yep. >> i can tell you, though, this sounds like a lottery was hit. it doesn't always work out quite this well. usually it's just idle chatter that triggers trades. >> i think the really important point here is it worked this
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time. how many times has 245 not worked? because it's going off keywords, buy, trigger, go, and if it doesn't work they're losing money just as fast. >> doc, thanks. crude reversing course after yesterday's rally. jackie deangelis is at the nymex with the futures now crew and iran factoring in what we're seeing yet again today, jackie. >> absolutely. good afternoon to you, scott. the latest headline that we have is that enough progress has been made to continue these talks with iran until june 30th. so that deadline extended out again. that is going to probably come out in a joint statement. of course traders are waiting for that statement before the end of trade today. jeff killburg, your take on this. is it srt sort of the traditional idea that we will see a deal that will bring more supply onto the marketplace that pushes crude lower? >> jackie, i think inevitably we do. but yesterday's 5% pop to the up side, that was due to reduction of production here domestically. but let's keep this in mind. it was only a .4% reduction.
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36,000 barrels. look across seas to iran, that could be mitigated with 3 million barrels a day of production. so in the event these talks go successful as planned, i think the path on crude oil short term as well as long term is to the down side. >> okay. jim, i want to get your take on this because i know you look at crude through the context of the euro-dollar trade. we've got a weaker dollar today, which usually would send crude higher. obviously not enough there to create that balance. so what do you think is going to happen as the dollar potentially continues to strengthen? >> this was interesting to me today because i wanted to see if crude could go lower even though the euro was go higher slash the dollar going lower. and the answer to that seems to be not very easily. and i've always admitted that there are other factors besides the dollar contributing to the price of crude but that dollar still is a major factor. at the end of the day, however, i still think after the euro goes to the up side a little bit technically it does continue its path lower and that opens the door for crude to go lower too. that's my belief. >> all right. we're going to talk more about
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crude on the live show. we're also talking to gina martin adams from wells fargo. she was one of the biggest bears on wall street. she seems to be changing her tune. we're going to ask her why at 1:00 p.m. futures now on scott. >> let's go over to michelle caruso-cabrera. >> when we get a statement on the iran nuclear discussion that's are ongoing, almost a deal but we don't know quite what it is, they say the statement coming roughly around 1:00 we believe will suggest that they have made enough progress in switzerland that they will be able to continue until june 30th. we know that reporters have been told to move immediately toward a news conference that's going to be held. there's going to be a series of news conferences that's being report by several organizations. the first we're going to hear from eu, from iran, and then we're going to hear from secretary of state for the united states john kerry after that. we don't know exactly what it's going to be, but reuters is reporting that there's been enough progress for them to continue until june 30th.
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remember, scott, we never expected a final deal. what they were trying to hammer out for the last eight days and missed the deadline over several days is were they going to be able to come up with a framework to continue negotiating the details on a final deal. but so far the indications are that we've gotten some kind of interim possible agreement at least according to reuters. back to you. >> michelle, thanks. natural to look at what crude is doing relative to what michelle is telling us but also if there is a statement anytime. we'll obviously let you know what it is because it could have an impact on the overall market and the major averages as well. coming up, jeff sonnenfeld versus the activist investors. >> what do they come back with other than telling us we need to cut costs, cut r&d, lay off workers. where are the returns themselves? >> well, trian's nelson peltz has a lot to say about that. don't miss our exclusive interview with him next. and don't forget to visit all the trades and analysis from our team. we're right back.
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hello, everyone. i'm sue herera. and here's your cnbc update at this hour. as you've been hearing according to reuters a joint statement from iran and eu negotiators will say there has been enough progress to continue those talks until june 30th, when a final deal is expected to be reached. a press event is planned for about 1:00 p.m. eastern time. and we will bring that to you. new york police say two women from new york city have been arrested on terror-related charges. the u.s. accusing the defendants of knowingly and willfully conspiring to use weapons of mass destruction in the u.s. they are expected to appear in brooklyn federal court later this afternoon. european union antitrust regulators are investigating apple's deals with record labels to see if it's blocking rivals' access to its music planned streaming platform. this as the company expands into the fast-growing music streaming business to offset a decline in itunes sales.
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and rio de janeiro's iconic christ the redeemer statue was lit up in blue lights to mark world autism day. families affected by autism took part in that event. one in every 100 children is born with that disorder. which is why we're all wearing our little blue puzzle pin pieces today. that is your cnbc news update at this hour. back to you, scott. >> yes indeed, we are. sue, thank you so much. well, activist investors aren't all they're cracked up to be to be. that's at least what yale senior associate dean of leadership studies jeffrey sonnenfeld says. s sonnenfeld penning a rather provocative op-ed in today's "wall street journal" suggesting that investors would be better off buying an index fund rather than following the moves of, say, carl icahn or nelson peltz among others. this morning on "squawk" sonnenfeld had this to say. >> they're coming in now well below, you know, where you would have thought they would have come in with the enthusiasm, the bravado, the energy, the excitement, and create a lot of big media attention with these
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wild campaigns and giant releases everywhere and the blogosphere filled with this activity. but what do they come back with other than telling us we need to cut costs, cut r&d, lay off workers? where are their returns themselves? >> well, joining us with more on this is our very own kate kelly. you've looked at this as closely as anybody. >> yes. >> fact from fiction. what's the deal? >> here's what i would say. i think jeff is not wrong on the absolute facts. i mean, basically, you'd be better off with an index fund than any hedge fund in recent years. and in fact in most years that's the case. and that's the major ding on hedge funds. however, within the hedge fund universe activists have outperformed. take a look at some statistics for the last three full years. you see in every case the average hedge fund not only underperforms the s&p. that's sort of been a given. but the activist funds have dramatically outperformed the average hedge fund. so within the hedge fund world that is a winning strategy. another data point i would draw people as tension to, a study in
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2013 by the harvard professor lucien bebchuk and some other colleagues pointing to what happens to activist target stocks in a period of time after they invest. they note that there's usually an initial pop of 6% that does not necessarily reverse over a five-year period. sometimes stocks fall. but relative to other benchmarks it's not as if it's a short-term phenomenon that reverses quickly. >> couple of quick points here. number one, long-short hedge funds typically underperform the best-performing market. and that's okay as long as they outperform the worst-performing ones. >> that's the argument for a hedge fund. hedging your upside or your down side. >> right. and to your point, activists have outperformed the traditional hedge fund. >> absolutely. >> number two, i call icahn i talked to. i talked to ackman today as well. both of them obviously are huge supporters as you would expect of activism in general. ackman says, look, it's nonsense, we push the companies
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to do better, we push them to go farther than they otherwise might have gone. icahn took specific issue with several things that sonnenfeld said in the piece and what he said on "squawk" this morning regarding dell and was quick to point out as well, look, i've gotten letters from dozens of shareholders over the years who said thank you for doing what you did because we made more money as a result. >> right. here's what happens. sonnenfeld, again, talks about how the ideas that activists come up with, balance sheet management, some call it financial engineering, operational changes, spinoffs, mergers, what have you, sometimes they're obvious, sometimes they're things that management might already have under way, but perhaps the pressure that comes from activists speeds up the process. and as a shareholder that very well may be a good thing. now, obviously people disagree. larry fink has disagreed. marty lipton has said this is the ultimate short termism. there are some arguments to the other side and they're fair as well but i think evidence shows activists not only outperform
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their hedge fund peers in recent years but also seem to have a share price improvement on companies short term and also longer term. >> kate, thank you so much. >> thank you. >> joining us exclusively now is trian's nelson peltz to respond to the sonnen felds op-ed. nelson, thanks so much for joining us today. >> great pleasure. thank you for having me. you called his interview provocative. i call it inaccurate. >> he went after you pretty good. >> well, look, i don't mind anybody coming after me as long as they come after me with facts. he's a professor. i assume he's telling his students to do good work. his work was just a bit faulty. i mean, he said that -- he mentioned our returns for 2012 and 2014. he sort of missed 2013, when we were up 40% net. he said our return in 2014 was a number which is far less than
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11%, which is what we achieved. and in fact, since inception, we're up net 137%, beating the s&p by 3400 basis points. he also said a couple of other things that are inaccurate. he said that -- and this really is amazing. he said that du pont invited ed garden on the board. now, professors should do a little more digging and a little less bidding. if he'd read our proxy statement and their proxy statement, this is one of the few things that both parties agreed to. we both agree that ed asked for a board seat in 2014 several times and was turned down. in fact, i was a compromise
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candidate put forth, and they're trying to characterize that as me being stubborn and insifting that it's me and only me. >> sonnenfeld said this morning on "squawk box" when we were having this conversation that you were essentially holding the company hostage by making that demand. why does it have to be you? >> it didn't. we originally asked red garden. we want a trian principal on the board. i mean, think about what we're fighting about. what we're fighting about -- nobody likes a proxy fight. shareholders don't like it. boards don't like it. we don't like it. we stayed below the radar, scott, for 18 months. we didn't go on cnbc. we didn't go to any newspapers. we were trying to work constructively with this board and with management. we waited in the hope they would meet guidance. they missed two years in a row. finally when they missed the
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third year in a row we asked for one board seat and we asked for that one seat for ed, not for me. they said no as i said. think about it. one board seat. one out of 13 or 14. how much damage could we do? think of it as chicken soup. >> even fidelity, what's your response to fidelity coming out and saying look, enough is enough? just settle it already. >> i don't know that fidelity said that. i know a large mutual fund complex asked du pont and asked us to settle and we made every attempt to do that. i don't know that it was fidelity specifically. >> let me ask you, nelson, to respond directly to one of his criticisms. and that is that -- and i'm quoting from the article here. five of the 11 companies where trian has had a seat on the board underperformed the s&p 500 between the time trian got its seat and the end of last year.
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wendy's, legg mason, monodolese, family dollar, and kemptura. >> this is also what's quite disturbing. i think i sent you a chart with trian's position and on that chart i hope you've got it on tv, i can't watch and create an echo as you know. >> we will. you should know i have it in my hand as well. >> if you look at the asterisk on that chart, those are all of the boards that i personally served on. the chart says that we beat the s&p by 680 basis points. and it said that the boards that i was on beat the s&p by 869 basis points. and that is mondolese kraft, heinz, wendy's, ingersoll-rand. so i just don't understand where he gets -- i don't know where he
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gets his numbers. >> let's also be clear, and i should let you know, i do have the chart in my hand. we're having some technical issues and we're trying to get those resolved and we hopefully can get those up -- >> the numbers -- >> i have the numbers up on the board. >> those are annual numbers. >> let's make the distinction, though, nelson. this chart we have is the performance from the date of your first purchase of the shares. he makes the distinction that since you got a seat on the board. okay? >> look, i can't tell you what he said because everything we found so far that he said has been inaccurate. so i don't know how i can answer that one without doing more work. but i think that if you speak to your colleague jim cramer. jim cramer said even after we announced that we're one of the only ones whose stock goes up even after we announce and stays
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up, i don't know what dates he's picking but when he picked 2012 and 2014 to talk about returns and even those numbers were incorrect and left out 2013, i think it becomes questionable as to who he's on -- and he's quoting directly from du pont's fight letters in certain cases. >> what about i guess the argument in general, nelson, that activists like you, you get on the board, you spend -- this is over maybe an 18-month and two-year period and you get the company to do what you want initially, you go flu the playbook, you get the buyback, get your seat, maybe get a dividend, get a spinoff. but then what? what value do you and other activist investors bring to a company once the initial playbook runs its course? >> scott, first of all, we work the income statement first. and therein is a big difference
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between us and some other activists, not all. the background of trian is building and fixing and running companies. it's not just buying and selling stock. we have a history of doing that. we built a fortune 100 company in the '80s. our turnaround is a harvard business school case study. that's not true. and if you look at the very first stock we bought when we started our fund in november of '05 it was wendy's. we're still in wendy's today. you know, look at du pont today, scott. at one point it was probably the most valuable company on earth. it's a shadow today of its former self. they have been in decline for decades, even before ellen coleman got there. earnings from 2011 have been down every year and guidance
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this year again is below 2011. >> but couldn't i say since january of '09, nelson, when coleman took the helm at du pont the stock's up 182%? doesn't that count for anything? >> you can say that. but stocks usually move because of earnings, scott. and if you look where the greatest movement in this stock occurred is when we announced the stock was up 500 basis points. and then when we issued our white paper is it was up yet another 500 basis points and earnings have been flat or down from 2011. so there's quite a difference there. >> let me shift the focus if i could to kraft and monodolez. you were in avt kraft, pushed heavily for the spinoff that became monodolez.
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kraft does a deal with heinz for a tremendously large premium. you're on the board of mondolez. did you back the wrong horse? >> not at all. we think mondolez is a great company. we're not arbitrageeurs. we're not betting on companies that might be bought and might not be bought. we're investing in companies that have great potential. mondolez since we've gotten on the board at mondolez has announced that the margins are going from 12% to 15% to 16% by 2016. they've announced zero base budgeting to accomplish that. they have a big capex program in spite of what professor sonnenfeld says. and they've nuanced a joint vent yue which is hugely value enhancing and roughly $5 billion is coming out of that jv and a lion's share of that is going to shareholders and stock buybacks. so i think mondolez is doing
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great and if you look at our chart since we invested in mondolez kraft because that's where our investment lies, we are up 162% versus the s&p of 71. and we think there's a lot more to go. we think mondolez and a great company that is just starting to hit stride now. >> so as you might expect, nelson, sonnenfeld of course is wachk the interview live and he has sent me some numbers. i'm going to run them by you, and in obvious fairness you're not sitting there able to process this in real time perhaps but i want to read you what he based his article off some of the data. fair enough? >> yep. >> he says mondolez, for example, board date as of january 17th, 2014 at the end of last year the company stock was up 4.7%. the s&p 14.2. underperformance. family dollar, september -- >> hold, it hold it, hold it,
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hold it. let's do one at a time. okay? >> okay. >> okay. if you look at the year before last year we had white papers out on mondolez. okay. the shareholders, research analysts knew what we were saying about mondolez. my board seat was just the culmination of the fact that the company and trian agreed on a path forward and a lot of that stock price went up prior to me coming out of -- he is picking a date, look at the date since we bought the stock. i'm giving you real hard fact. hard fact is we invested in mondolez kraft and we've gotten a return, as i toiled, and i still hope you -- >> i do. 589 basis points over the s&p. >> thank you. family dollar. let's talk about family dollar. >> s&p 500 nearly doubling the return in family dollar since
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you were on the board. not quite a double, but you know, it's getting close. >> exactly. thank you. these are facts. i don't know where he gets his information from. but you've got to be skeptical of anybody who can't even get the right numbers for our numbers for 2014, who can't get the right -- and leaves out 2013 and then cites 2012. really, you've got to start to understand who are his sponsors. who are his honorariums. and we have to get into the background of these things. our sponsors and our honorariums are our investors and all the shareholders of the companies that we invest in. we play with our cards face up. we should ask professor sonnenfeld to do the same. >> nelson -- >> let me tell you something. i've had three kids at yale. one graduating next month.
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it disturbs me because i have so many respect for the institution. that he can stand in front of a banner and just cite inaccurate performed relative and just have a -- well, my numbers say this, his numbers say that. i want to end it this way. i spoke with both, you know, your friend, carl icahn and bill ackman as well, reading this article, defending activism to the hilt saying it forces companies to work harder, push harder for shareholders, and that against the criticism of marty lipton and others says they are short term players in it for one thing, and that's to make themselves richer. >> really. well, let me tell you something. what we have found when we got on a board, not only are we a
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catalyst for the company to get better, but we find that the directors get involved, ask more difficult questions. they are much more prime to make sure the company is sticking to it and keeping its promises. scott, the short term business is just nonsense. you know, before it was raiders in the '80s. you can't find one company that we raided. then it was green mailers in the 80s, and there's not one company we green mailed. okay. now it's activism, like activism is bad and only good for a select group of people. in effect, activism is good for all the shareholders. our holder period in stocks is typically longer than many mutual funds. in fact, most mutual funds. i mean, there are not a lot of
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mutual funds saying they've been in wendys for niep years. and have been in heinz since the company was sold from 2006, so, you know, this is all -- this is all blather. it's not accurate. >> right. >> and sonnefeld knows that for a fact. >> lastly, i'll let you go, nelson, but in light of the heinz-kraft deal and that you are personally on the mondelez board, are you going to push the company to do a transaction with somebody? >> no. i'm not pushing him to do any transaction. i'm pushing them like the board and management is pushing all in the same direction to have the numbers continuely improve, to have margins continuely increase, and to sales continuely go up, that's what our goal is. >> nelson, i appreciate you
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joining me today. >> thank you, scott, have a great afternoon. >> you as well. we'll talk soon. the debate over activism continues, and, plus, all today's big market movers when we come back on the half. the halftime report with is thee place for market moving interviews. >> when you see large currency moves and large price moves in a commodity like oil, you have to be worried. >> real money. >> what makes things cheap is uncertainty. >> real debates. >> interest rates are going to go up. they can't drop this year. >> the most profitable hour of the trading day. >> if the stock doubled, you have not missed it. >> the halftime report at noon eastern. let me talk to you about retirement. a 401(k) is the most sound way to go. let's talk asset allocation. sure.
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you seem knowledgeable, professional. would you trust me as your financial advisor? i would. i would indeed. well, let's be clear here. i'm actually a dj. [ dance music plays ] [laughs] no way! i have no financial experience at all. that really is you? if they're not a cfp pro, you just don't know. find a certified financial planner professional who's thoroughly vetted at cfp -- work with the highest standard.
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welcome back, reacting to what nelson told us in the conversation about the op-ed in "the wall street journal,". >> well, i think it's not fair to talk about the average atavist fund. number one, nelson peltz is far from average, maybe the best of all time. number two, averages are created by widely desperate results, great funds, terrible funds, and somewhere in the middle is the average. throw that out. second thing is, if guys like peltz and icahn are not pushing companies to be shareholder friendly, who will do it? is vanguard going to do it? the whole -- >> that's been one the biggest
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criticisms in the entire discussion. >> someone has to do it. look, i'm not saying every single activist campaign is good or bad, but i'm saying most of the money now is managed passively so you need to counter balance that and step up. the guys stepped up. >> the broad counter point is are we enganging in financial engineering, short term years, five years for example, not ten, or at the cost of ogranic growths -- >> i'll answer with a question, though. do we believe apple can profitly reinvest $130 billion? come on. >> right. >> there's a balance. >> it's not black and white. >> hold your thought. michelle caruso-cabrera has breaking news. confirmation of two individuals involved in the talks there is an agreement. first, from the verified twitter account of the e.u. foreign chief negotiation, she says, now going to meet the press, good
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news. the foreign minister of iran, zarif tweeted out we have found solution, ready to start drafting immediately. so it appears there's an agreement, this was the first direct confirmation from people involved in the discussions. we are now waiting to see the role out of all of these news conferences we've been told are going to occur. first we're going to hear from the e.u., and then we'll hear from zarif, and then we'll hear from john kerry as well, u.s. secretary of state as the afternoon progresses. sometime in the next few minutes, we should start to see the news conferences begin. guys, back to you. >> all right, michelle, thank you so much. pete, obvious question now becomes does oil find that new momentum for the new leg lower? >> right. yeah. >> going to get more supply coming on the market. >> yes. >> crude was back above 50 in the last, you know, couple days, and here we are making a move lower, maybe that continues on the actual announcement and the
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follow-through, what do you do? >> it could. look over -- we talk about it all the time, and you can trade it, scott, it's extremely liquid. there's options that trade on it. when opx is below 50, that's buying opportunity because the volatility remains around oil. >> you buy energy stocks? stay away? more reason to stay away? >> i think you buy the derivative, the transport stocks that benefit from the lower energy price. >> which underperformed. >> but, again, at the end of each quarter, what do you do? buy, in some cases, we buy moment momentum, and in others, i pick those that are down at the end of the quarter, and these would be the attractive ones right now. look at airlines today. we talked about them yesterday. >> wti, wake me up at 42. interesting thing we talked about today is stocks act better than commodities. look for the stock to look good after crude washes out. >> kate, transitioning you from hedge fund expert to commodities expert. you are. >> we'll see that 20 handle
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sooner than expected. you say wake me up at 4 it 2. i thought you would say 22. a lot of stock players i know are just staying away from even the enp names. it's volatile. >> thank you so much. more developments likely in the next few minutes. that's all for us, and "power lunch" picks up on the important story now. >> thank you, scott. we appreciate that. we will, of course, follow the latest developments over in europe regarding the possibility of a deal or frame work for a deal with iran regarding its nuclear program. along with mandy, i'm here with "power lunch" for the hour, and we're here with breaking news. >> cdc alerting us right now to a serious illness they believe is coming from international travelers and spreading across the united states. we have more details. meg? >> that's right. the bug is causing outbreaks of the intestinal illness in 3 it 2 states and pouerto rico.


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