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Billionaire Bill Ackman advises Trump to launch ‘the biggest infrastructure program of all time’

Billionaire investor Bill Ackman called on President Trump to unleash the biggest infrastructure program in hopes to bolster the U.S. economy amid the coronavirus pandemic. Yahoo Finance’s Julia La Roche joins the On The Move panel to share the details.

Video Transcript

ADAM SHAPIRO: We're going to turn our attention more inward, not from China, but to the United States because Bill Ackman is calling for a massive infrastructure spending program from the federal government. Julia La Roche wrote about this and has posted this live. Tell us more, Julia, about what Ackman is calling for.

JULIA LA ROCHE: Hey, Adam. That's right. And Bill Ackman, the well-known hedge fund manager and activist investor who runs Pershing Square Capital who normally snaps up large stakes in big companies and pushes for change from management, has been quite active lately-- it's a bit unusual-- on Twitter, just two weeks ago making news, calling for President Trump to shut down the US, except for essential businesses, for 30 days.

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Here's what he's asking President Trump to do now on Twitter. Bill Ackman tweets, "Mr. President, why don't you launch the biggest infrastructure program of all time now? Roads, bridges, and other infrastructure involve outdoor work that allows for social distancing. Doing so will put Americans back to work now in good paying, virus-safe jobs."

Now Ackman also went on to tweet that this can be done relatively cheaply, pointing out that near-zero cost, long-term financing is available. He also says that build costs will be lower because of lower commodity prices and less competition for labor. He says, "We can rebuild America's infrastructure and help support the economy to enhance the recovery from the virus."

He also pointed out that President Trump would get unanimous support from this from both Democrats and Republicans. And it gives us hope for the future. He says, "Let's get a good many of our fellow Americans working again in all 50 states, while those of us with desk jobs work from home."

I'll also point out, Adam, this is not the first time that Ackman has brought up infrastructure. Back at the 2017 SALT Conference, which is hosted by Anthony Scaramucci and SkyBridge Capital, Scaramucci asked Ackman, using that activist mindset, how could Trump turn around his presidency. And, at the time, he said that he would do infrastructure. He pointed out this was bipartisan, that this is something, when you look at America-- and we've talked about this for many years it seems like-- we're far behind on infrastructure.

Our roads are terrible. That's a fact. That's something that's well known. You've heard CEOs on conference calls complaining about our airports, for example, our bridges, our tunnels, et cetera. So there is an investment gap, if you will, when it comes to our infrastructure.

So, Ackman, I've known him for many, many years. Yes, I mentioned he's an activist investor, also an activist in life. And, when he sees a problem--

ADAM SHAPIRO: Sure.

JULIA LA ROCHE: --he's going to identify it and speak up about it. And now he's got this Twitter platform, almost 100,000 followers, getting quite a lot of attention lately, Adam.

ADAM SHAPIRO: Julia, I'm curious if he-- he mentioned the fact that, last week and a little bit before that, when he was sounding alarms about the US economy and then made, what, over $2 billion, by shorting some of the market, that it brought into question some of his credibility? Does he address that? Because a lot of people--

JULIA LA ROCHE: Yeah, and, Adam, I think that's really important to address. I want to be very clear. So, on our air, before we were all work from home, Ackman had put out this letter about these large notional hedges that he had put on that had asymmetric payoffs. He was very public about that he was worried about what was happening with the economy and the coronavirus' impact and put on these hedges.

At the time, I thought maybe they were credit default swaps. If you go back to the prior crisis, Ackman made his name in CDS. That's exactly what he did.

Now, for those who aren't familiar-- and he's explained this-- credit default swaps are used as a kind of form of insurance on your portfolio. So he put on a CDS. It was $27 million that turned into proceeds of $2.6 billion. It's not like he was actively shorting stocks to be clear.

Now, meanwhile, Pershing portfolio, he has a handful of stocks, but huge positions in a handful stocks. I'm talking about billion-dollar-plus positions in just a small number of stocks like Berkshire Hathaway, Hilton Hotels, Restaurant Brands, Chipotle, Agilent Technologies, Lowe's, et cetera.

And it's not like he sold off any stocks. He did not sell off stocks, did not short stocks, but used the CDS as a hedge portfolio insurance so that he took the profits at $2.6 billion, which was about equivalent to what they had lost on the portfolio going down about 30% on a market-to-market basis. They put that money back to work in those stocks, also re-entered Starbucks. That was a very profitable position for Ackman. I'm sure he saw the levels and thought they are attractive.

This was not him-- and he said that this was not him talking down the stock market. He was genuinely worried. He had been publicly bearish. He is bullish on the idea that the Trump administration will do the right thing.

Yes, he called for a 30-day shutdown. Right now, you've seen the president just recently, you know, is talking about extending those social distancing guidelines, but you've seen a number of states, a number of governors, who have actually enacted, you know, stay-at-home protocols for their various states.

So it seems to me that Ackman, based on our conversation on our air, that he's confident that we'll get through this. He saw buying opportunities. Just to clarify, he was not short any individual stocks. I mean, the credit default swaps were things in like high yield, those sorts of things. And he already exited huge part of that position prior to that CNBC interview, Adam.

JULIE HYMAN: Julia, I'm going to chime in if I can on this. And I don't know if this is more of a question or a comment. But, just to play the skeptic a little bit, not on the investing front, but just the effectiveness front, you know, Bill Ackman, yes, is a well-known activist investor, well-known investor period, less known as a political activist, right? And I don't know what kind of pull he would have in Washington. Yes, he has a big Twitter audience, but--

JULIA LA ROCHE: Now he does.

JULIE HYMAN: --to be cynical, unless he's saying this stuff on Fox News, perhaps, I don't know if the president is going to get the message or-- or act on something like this. So you have to wonder, you know, him using his platform in this way, if it's actually going to percolate and-- and get to some kind of actual action.

JULIA LA ROCHE: Yeah, you know-- no, it's interesting, Julie. I think this is an ongoing conversation. And I would go back to, you know, whether or not he's a politician or whatnot. And I think you are seeing leadership from business leaders who are, at least, speaking out. And people want solutions.

And I feel like, if you have ideas, to sit quietly, what good is that going to do? People don't have to listen to your ideas, but if you-- you have every right, free speech, freedom of speech, to voice your concern, voice your ideas, on your platforms. And the reason he's garnered such a following, I mean, that has to do with the way that he's built his brand and the way he's run his firm for the last couple of decades now, I suppose, at this point. I'm not sure exactly how old Pershing Square is anymore, but, I mean, at least the early 2000s they've been around.

So, yeah, I think, if you have ideas, I mean, I've seen other letters. Maybe people aren't necessarily going on air and talking about it. That's a personal choice. He had been off of financial TV for over a year at this point. So I mean, I don't know. I don't know the answer to that.

ADAM SHAPIRO: Well, Julia La Roche's article with Bill Ackman is posted at yahoofinance.com. You can read that. As we head to break, I want to let you know the S&P 500 up 55 points, Dow now up more than 400 points, and the NASDAQ is up 193-plus points.