Street Capitalist: Event Driven Value Investments

(Edit: Transcript is here)

I managed to catch Bill Ackman’s interview on Charlie Rose last night. Ackman manages Pershing Square Capital Management, a $6 billion dollar hedge fund. The interview really did not cover too much new ground, he mostly discussed his perspectives on the credit crisis; ranging from the Fannie Mae and Freddie Mac bailout to the current TARP program. I’ll be sure to post a link to the video and have more of the transcript later. For now, here’s an interesting bit on General Motors (NYSE:GM), Ford (NYSE:F), and the possibility of a Detroit automaker bailout:

Charlie Rose: Where are we today?
Bill Ackman: We made progress. The TARP ($700B) has been spent well so far. $250B to banks was an important first step. 2nd, the Gov taking steps to make cost of spending go down is a positive. We have some concern about other things they’re thinking about.

Charlie Rose: Like?
Bill Ackman: I’m concerned about GM. This is a very important company. It has too much debt, uneconomic contracts. The way to solve this problem is to use the bankruptcy reorganization process for the company. Do a pre-packaged bankruptcy. The equity holders have been largely wiped out. Debt trades at $0.30 on the dollar. Equity guys are overpaying right now. Reduce the amount of debt to a level that the company can support. Debt holders will own the business. You want them to compete. Not so that they can borrow taxpayer money and pay interest to people who they owe money to from 5 years ago. We can’t be afraid of bankruptcy. I have no economic interest except for the good of the country.