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Bill Ackman on Carried Income Tax, $JCP, $CP, and Charity Event

PERSHING SQUAREPershing Square’s Bill Ackman was on CNBC’s Squawk Box this morning (see the video here).

Ackman Discussed Taxes

Ackman also discussed taxes on the Squawk Box this morning. When asked about carried interest, Ackman said that  is “not as a good a deal” for hedge funds as it is for private equity. He says it depends on the underying character of the fund and the way it is structured. For instance, the way that Pershing Square is “structured, 100% of the incentive fee for that we get for the offshore fund is taxable as ordinary income. And, for the onshore fund, it is only that portion of the income that’s long term.” Ackman went on to say that  60% of Pershing Square’s money is off shore. When asked about his own tax bracket, Ackman said that he did not know his tax bracket but he does know that charitable donations make a big difference and he makes a lot of charitable donations. Ackman, said he is not opposed to a higher carried interest tax and he thinks most hedge fund managers would support a higher carried interest tax but they want it as part of tax reform generally, which he says he thinks is “very very important.”

Ackman Discussed His Investments

Ackman was asked about his investments in J.C. Penney & Co. (JCP) and Canadian Pacific Railway (CP). Ackman said that when it comes to JCP he feels “great about Ron Johnson and the people he has recruited and the way he has helped lift the morale of the company.” He is sure he is on the right track with JCP. His Pershing Square owns 26% of the company and Ackman says he is “in it to win.” Ackman said “I like it a lot.”

Ackman says that the success of CP is more event-driven. He thinks that if he is successful in installing Hunter Harrison as CEO, and he thinks he will be, then CP is “the stock” to own. Ackman cited a recent analyst report that says that if Harrison is elected CEO of CP, the one year price target for the company is $100. The stock opened today at $70.56 a share, near the upper end of its 52-week range of $44.74 to $73.06. Right now, CP has a one-year target estimate of just $67.62 a share. Ackman noted that CP was trading below $50 before he got involved and explained that if he is unsuccessful in installing Harrison shares in the company will go right back to where they were.

Ackman Talked About an Upcoming Charity Conference

Ackman talked about his upcoming investment conference. It will benefit Boys and Girls Harbor (boysandgirlsharbor.net), a 75-year-old organization that benefits children in Harlem. The conference will be unlike so many others where there are thousands of attendees that simply watch speakers give presentations. Rather, this conference will provide the opportunity for attendees to meet and lucy with the speakers, including Ackman himself. In order to go to this conference, attendees are asked to donate $1500. Ackman is trying so hard to boost attendance to this event that he offered to match CNBC viewer contributions, meaning that a viewer could gain attendance for a mere $750 because Ackman would match the rest, or if the viewer pays the full amount, Ackman will match that. Ackman said, “I will give an idea. You will make $1500 from my idea. So, very low risk. It will pay for the whole event.”

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