WHEN: Today, Wednesday, November 13
WHERE: CNBC Delivering Alpha conference
Following is the unofficial transcript of a CNBC interview with Trian Partners Founding Partner and CEO Nelson Peltz and CNBC’s Sara Eisen live during the CNBC Delivering Alpha conference today, Wednesday, November 13th.
Mandatory credit: CNBC Delivering Alpha conference.
Realtime Transcription by www.RealtimeTranscription.com.
SARA EISEN: Aging like fine wine. Nelson is the perfect person to start us off on Delivering Alpha. He is the ultimate tone-setter, I would say. And I think there’s nobody better to ask about the tone in the market, the outlook. It’s been a pretty exciting week or so since the election. He also has views on everything, so we’re lucky to hear from him. But how are you thinking about the outlook right now?
NELSON PELTZ: Look, I’ve never seen so much optimism, you know? Thankfully the election is over. Thankfully. And thankfully it was a dramatic win. It wasn’t a squeaker. We know where we stand. There’s no question, we know where America stands. Trump got the popular vote; he got the Senate; he kept the house. So the ball’s in his court.
SARA EISEN: That a good thing?
NELSON PELTZ: I think so. I think so. I think —
SARA EISEN: You’ve been a supporter.
NELSON PELTZ: I think the alternative was terrible. I really do. The alternative was ridiculous. It was a woman who took no responsibility for the last four years, and I didn’t like the way we were going anyway. The balance — look. America is number one in the world. It’s the shining light on the top of the hill, whatever the expression goes, and we’ve separated ourselves from whoever number two is. But we’ve got issues that we have to resolve. We’ve got issues that we have to deal with. We’ve got to fix our balance sheet. We’ve got to get this immigration problem finally behind us. And I think Trump is going to do that, I really do. I think he’s going to deal with those issues head-on. I like the fact that he’s putting a cabinet together right away. We’re not waiting a month to pick one at a time and do all that stuff. He’s got a plan. I think he’s going to do a good job. I think the first four years were sort of practice for these, you know? So I’m very pleased and very optimistic, and we’ve got to deal with our balance sheet.
SARA EISEN: I’m glad you brought that up, because a lot of investors are talking about dealing with the balance sheet and dealing with the deficit. President-elect Trump is not talking about that, and actually bond yields have risen since he got elected and some people are worried about the deficit and more spending and a lot of tax cuts and a lot of what he promised on the campaign trail.
NELSON PELTZ: You know, Sara, if you look — and this is an amazing statistic. If you look at the budget of 2019 compared to what we spent in ’23, had we done that, had we spent what we spent in 2019, we would have a surplus. Now that’s not 20 years ago, that’s four years ago. That’s how much the spending has gone up. We can’t afford to keep doing that. That’s our challenge today. I think all the other challenges are behind us. I think all the trade issues are going — the threats of all the taxes and duties and all that stuff —
SARA EISEN: Tariffs?
NELSON PELTZ: And the tariffs. I think that’s talk.
SARA EISEN: Oh, really?
NELSON PELTZ: I think he intends to do it, but I think our trading partners are going to change it. I mean, why should a Chevy in Paris cost over 100 grand? It shouldn’t, you know? It just — our way of protecting them, you know?
We beat Germany in 1945. We don’t have to keep making it better and better and better financially. We don’t have to keep protecting them. So I think we’ve got — and I think Trump is right. I think the threat of the tariffs will bring these guys in line.
SARA EISEN: So it’s a negotiating ploy?
NELSON PELTZ: I think that’s what it is. I could be wrong, I don’t know. But that’s a good way to start the negotiation. That’s his style, you know, come to the table with a hammer and see what happens. I think they’re going to relent. I think they have to relent. The protective tariffs that Europe has erected and other places have erected have no place today in the world, you know. We have to get rid of the 10 to 15 million people, whatever that number is, who came in here illegally over the last four years. That was ridiculous. There are so many talented people waiting online to come into this country. People who could help us economically, help us strategically. Help us scientifically. They are waiting patiently in line. You turn on the news and you see thousands of people walking over the Rio Grande. And now in New York, thankfully, we stopped giving them cell phones. We have illegal aliens that — come to New York, you get a cell phone. What is this? This is a joke?
SARA EISEN: I mean, it’s what he campaigned on. He has a mandate to do that, right?
NELSON PELTZ: I think the cell phones have stopped.
SARA EISEN: Right, the money stopped over there. Elon Musk is going to be leading this Department of Government Efficiency with Vivek Ramaswamy. I imagine you think that’s a good thing.
NELSON PELTZ: Elon is a friend of mine. I — my son Diesel and I, he and I, we had a breakfast at the house, we invited Donald for breakfast, and they sort of reunited again.
SARA EISEN: So you’re responsible for that match?
NELSON PELTZ: Yeah, I guess so. I hope it’s good, you know. I was a matchmaker.
SARA EISEN: I’m sure the president-elect is very grateful.
NELSON PELTZ: Look, that was late last spring. Since then — look, I don’t know that if Donald would have had this sweeping victory without Elon’s help. Elon was in Pennsylvania. I thought he was going to be Dutch or something, you know —
SARA EISEN: Amish?
NELSON PELTZ: Amish, right. I thought he was going to be Amish. He was there almost full time. He came to New York every now and then to say hello, but other than that, he was there. I take my hat off to him. I mean, he got the bit in his teeth and he wanted it to work. And if Donald gives him his — the opportunity, he will cut costs, and that’s what we need to do. We need to cut costs. Like everybody here, you’re a businessman, you’ve got to have your revenue be bigger than your expenses. It’s really simple. We don’t have that in America. Okay. That’s what we’ve got to do.
SARA EISEN: We talked a bit about immigration. We also have other problems in this country, and one that I know is very important to you personally, and me, is the rise we’ve seen in anti-semitism. You’ve spent years on the Board of the Simon Wiesenthal Center trying to fight this problem, and it’s explosive, globally. What do we do?
NELSON PELTZ: I was Chairman of the Wiesenthal Center for 30 years. We worked very hard, and I think we failed. Because look what we got? It was better in the ’80s, and ’90s, than it is today. And, you know, it’s our own fault. I mean, we tried to do so nice to everybody, embrace everybody, come here, come to our college, become our professors, and you know, we just think, you know, it’s Kumbaya, everybody loves everybody, and this is what we got.
SARA EISEN: America, you’re saying, it’s our fault?
NELSON PELTZ: Yes.
SARA EISEN: But it’s a global issue. Look what happened in Amsterdam.
NELSON PELTZ: I agree. I’m trying to get one of our companies that is having something go public, one of the divisions go public that they were registering in Holland, and I’m trying to get them not to register in Holland.
SARA EISEN: As a result of what happened?
NELSON PELTZ: Yeah, why would we want to do that? Why would we want to ignore this stuff? I’m just finishing a book about World War II, and to see all the horrible things the Nazis did, and here we’re going to let this get started all over again? It’s ridiculous. You’ve got to come down very hard on this. You really must come down hard and obliterate it. There’s no room for it, there’s no room for any of this stuff in America.
SARA EISEN: Yeah.
NELSON PELTZ: You can clap.
[ APPLAUSE ]
SARA EISEN: I mean, I’m glad to hear your activism on that front. Nelson, how are you thinking about the portfolio right now, given the changed outlook for the U.S. economy, the deregulation, the tax cuts, the tariffs, everything that comes with another Trump administration? Do you do anything differently to position?
NELSON PELTZ: Look, the companies that we invest in are consumer, financials without balance sheets, asset management, and the occasional industrial. I think we’re not going to change the way we do things, because fundamentally all those things are international. I mean, one of our biggest positions today is Unilever. It’s listed — it’s a FTSE company, it’s number 3 or 4 on the FTSE, but it’s an international company. And I’m very proud of what happened. That was a company that was in a coma for about 10 or 20 years. And we’ve gotten a new chairman, a new CEO, new CFO, and a board that’s about six or seven, where God knows how many were on the board when I got there. Our last quarter numbers were better than P&G. Sales growth was better, profit growth was better, margins were better. We spent more in advertising, and we’ve announced that there are 7500 white collar jobs that we don’t need. Think about that. Running a company with 7500 extra people you gotta pay every week. And they’re not happy, either, because they want to be doing something. They just don’t want to be hiding, which is what they were doing. They’re hiding. That’s all they do. They need to feel that they’re being constructive. So we’re going to help those 75 people feel — 7500 people feel constructive. And it will be good for both parties. And that’s what happens in all these businesses, Sara. I mean, these companies were created by founders, and they were so heavily invested, like 300 percent of net worth was tied up in their business, and nobody needed to tell them to work harder. Nobody needed to tell them to get another account, to watch the expenses, whatever. And then when these companies got successful, Proctor and Gamble, Unilever, Disney, when they got successful and that founder moved on, then you wound up with a company that were not founders and a board that was put there to watch the management. I went on my first outside board in the ’70s, and I think my director’s fee was between 5 and 10 grand a year. Think about that.
SARA EISEN: What company was that?
NELSON PELTZ: Sterling Bank, okay? See, I still remember that one. And — and — so at 5 or 10 thousand dollars a year, that’s an honorarium, not a source of income. Our job was to make sure the CEO was doing the right job. That’s what we were there for. Now roll forward today, directors at Disney can be making three to four hundred thousand dollars a year. Now it’s getting serious. You’re on two, three boards. You’re retired. Nice retirement income for you. The first thing you don’t want to do is upset the chairman. You want to make sure he’s happy with you. So the role of the board has changed as the compensation has gone up. And then you find nobody on these boards own any stock. So they really — they’re supposed to be protecting us. But they’re not in the same boat as we are. Any stock that they own was given to them. So they didn’t even write a check for the stock, and here they’re making three, four hundred thousand bucks a year, and my future is tied up with them. They don’t have any skin in the game. They have reverse skin in the game. That’s what we had at Disney. That’s what we have at a lot of these places. When we got to the Disney board in the proxy fight, the entire board, including the CEO, was making 35, 40 million bucks a year, had in total less than 20 million dollars of stock, in total. And all but a sliver of it was given to them. That’s not the way to run a railroad.
SARA EISEN: So why didn’t you win that one?
NELSON PELTZ: Why? Because the index funds didn’t want me to win. Index funds get paid a lot of money from Disney, and they didn’t want me to win. But let’s see what happened. I bought the stock in the mid to low 80s, and when we lost the proxy fight, within 48 hours, I sold all the stock at 119. There wasn’t much of a celebration with the victory, because it went back down to the 80s, and now it’s getting close to 100 again because they’re looking for a new CEO.
SARA EISEN: They’re reporting earnings after the bell today.
NELSON PELTZ: Okay.
SARA EISEN: What do you think is going to happen there? Are you suggesting you might take another look?
NELSON PELTZ: Look, if the stock goes back to the 80s, I’ll be back, I promise you.
[ LAUGHTER ]
NELSON PELTZ: You can count on me.
SARA EISEN: One of your core arguments, though, was they did a bad job at succession the first time around. Now they have James Gorman, former Morgan Stanley CEO, and they do seem very focused on it.
NELSON PELTZ: Oh, for sure. I know Gorman, he’s a good man. He’s going to do a great job, and he will do — he will get a respectable CEO in there. You know, what happens, the last two CEOs, Iger and Michael Eisner — I don’t know what happens in that office at Disney. I think if you’re there for a couple years, you think your name is Walt Disney, you change your initials, I don’t know, you walk around with ties, WD. I don’t know what goes on there, but they all seem to think they’re Walt Disney. And I knew Bob a little bit before the fight. I never saw him draw Mickey Mouse. He wasn’t much of a cartoonist. So we’ll see what happens. I don’t think — I think they’ll have a new CEO before the end of ’25, that’s my guess.
SARA EISEN: Before the end of ’25?
NELSON PELTZ: Yes, that’s my guess.
SARA EISEN: That would be a little early?
NELSON PELTZ: I have no inside information, but that is my guess.
SARA EISEN: They report tomorrow morning, my mistake, not after the bell. How did that fight stack up? We played some of the clips, Nelson’s greatest hits, with some of the other proxy fights you did. You mentioned P&G, that’s a success story. DuPont, you like to talk about a lot?
NELSON PELTZ: I lost that one.
SARA EISEN: Lost the battle, won the war?
NELSON PELTZ: First, we won Heinz, nobody heard of me. They did such a bad job that they would take anybody to put on that board to get that company working again. We got on the board, and the company did great. And then DuPont — and you know what is interesting, any proxy fight that we won, the CEO was never fired. Okay?
The one — so the first one we lost was DuPont. We got 46 percent of the vote, and they got the balance. The stock went from the 40s to the 70s. After we lost, it went back down to the 40s. You guys — one of you CBS people asked me am I going to sell our stock, I said no. It got back to the 40s, we bought more. The CEO made these crazy promises about the next quarter and next quarter.
SARA EISEN: This was Ellen Kullman?
NELSON PELTZ: Ellen Kullman. She missed the next quarter, and then the quarter after that, she retired. And then they brought in a guy who is a buddy of mine, Ed Breen, and Ed called me up and said, “I need to come visit.”
He came in and said, “I need you to sign a confidentiality agreement,” which I did. I signed, I trust Ed. And Ed said, “Look, we want to merge with Dow, I need your help in doing that.” I said, “Great.” We had a meeting at my house, the CEO and the number two guy at Dow, who is now CEO, Jim Fitterling —
SARA EISEN: Uh-huh.
NELSON PELTZ: — and the people from DuPont. The gates were closed. We didn’t let any investment bankers in the driveway, and that day we negotiated at my house what was I think about a hundred-and-some-odd billion dollar merger between Dow and DuPont, and the ultimate split-up into three companies. So the end result is our stock, when we sold it, was worth the equivalent of 117. So we work hard for our money, let me tell you, we do. And our investors are happy with our efforts. And today those businesses are better than they were when they were individual. Because there were pieces of Dow that DuPont needed, same — vice versa, that Dow needed. And then there were a few pieces that neither one of them needed. So we created three companies out of two, and things went really well.
SARA EISEN: That’s a good inside story. I thought you could only get here behind-the-scenes color. So, Nelson, where is the next fight? How do you determine that?
NELSON PELTZ: Look, we don’t look for a fight. I want to make love, not war.
SARA EISEN: Instructive, not destructive?
NELSON PELTZ: I’m looking for people to embrace me, Sara. You’re the only one who’s willing to talk to me in front of people.
[ LAUGHTER ]
SARA EISEN: How do you determine whether it’s worth it? You have been taking on bigger companies.
NELSON PELTZ: Well, bigger companies are safer companies, and I like the fact that they’re sort of unapproachable and they are very safe, you know. And the bigger they are, usually the worse run they are and the more opportunity to fix things, and so that’s what is attractive. I mean, you can find a little squirrely company that you may like. It could catch cold and die, but I’ve got to tell you, DuPont is not going to catch cold and die. Disney is not going to do that. P&G certainly isn’t going to do that. P&G was an amazing battle, and it wound up happily. They fought me like crazy. They spent supposedly a hundred million bucks to keep me off the board. We won our board seat. It was the biggest proxy fight in history. And you know what happened? The stock went from the 70s to 160, and David Taylor, who was CEO during the proxy fight, and I became great buddies. We —
SARA EISEN: You were on stage here.
NELSON PELTZ: We were on stage here, and as great friends, and — I was friends with all the guys I had proxy fights with except Iger.
SARA EISEN: So, you see upside in Unilever. Where else do you see the biggest upside in the portfolio right now, and I know you’re thinking about things like gen AI and how that’s going to impact the sexy ones, like the Magnificent 7, that get all the love around AI.
NELSON PELTZ: You know what is interesting, you bring that up. We’ve seen — if we stop and look back, we’ve seen certain companies 25 years ago which were unassailable, you know, Marshall Field’s, Macy’s. These companies just — they would go forever, and then they’re basically gone. And then you see other companies like P&G and Unilever, who they didn’t do anything so spectacular, but they stuck around because they have great brand loyalty. Whether they buy it on the internet or they go to the corner store, they are still buying Dove shampoo. So what is happening now is as this new technology gets more widely used, AI, for example, it only makes these old-line companies better. I’m seeing that. I saw it at Wendy’s. For example, at Wendy’s the drive-through — many of our drive-throughs are no longer manned by a human being. You’ve got AI who talks to you and you tell them how you want your burger. And believe me, he’s going to do it better than the guy who probably doesn’t speak English who is there, because they are multilingual, those AI, they are really smart. They speak all these languages. And they — and it really improves these companies. So you’ve got these old-line companies where AI is just going to make their business better. And then you see other companies and other industries where technology has killed them, and it’s really — and that, to me, is a very important thing. As you folks decide where you’re going to invest, you’ve got to think of where technology is going to really help, where technology is a threat. And it cuts both ways, and it’s really interesting to see an old-line company like Unilever really using Open AI just a little bit, but it will get better and better. And where companies like Macy’s and Marshall Field’s are just — they’re really hurting from all this technology. So that’s a challenge when you decide and think about where you’re going to make your next investment.
SARA EISEN: So this is an investor conference, and everyone really wants to know where the market is going. So, Nelson, what type of background, economic environment and investing environment do you see? We’ve already had such a tremendous runup off this Trump rally, off the Fed cutting rates. Do you think it continues?
NELSON PELTZ: No —
SARA EISEN: Really?
NELSON PELTZ: No, trees don’t grow to the sky, definitely not uninterrupted. There will be something that might upset it. I think you’ve got euphoria from the election. On the other hand, the international stocks got slayed over the last weeks or so.
SARA EISEN: Unilever got hit?
NELSON PELTZ: Thank you for reminding me, you know.
[ LAUGHTER ]
I thought we were on a hell of a roll there, and all of a sudden people realized it was listed on a FTSE. You can’t have anything listed on the FTSE.
SARA EISEN: The point is, you think the market looks what, fully valued?
NELSON PELTZ: I don’t know what the market is. You’ve got the S&P 500, and then you’ve got the S&P 2025. And you know, that’s what it is. You’ve got two different markets. It’s the wrong name. You’ve got these 20, 25 companies that are swinging a cat around the room, and then you’ve got these other companies. Did I say something politically incorrect? I have to watch it. I’m very old. My kids tell me you’re not allowed to say that. You’re not allowed to say that.
SARA EISEN: I think you can still swing a cat. You cannot eat a cat.
[ LAUGHTER ]
NELSON PELTZ: Okay.
SARA EISEN: Well, we’re out of time, anyway. I just want to say, first of all, thank you very much for all the time that you’ve spent here today, and being a friend to Delivering Alpha for many years. It’s always great to have you. And it is an extra special way, I think you’ll agree, to kick off today’s event. So thank you very much.
NELSON PELTZ: Thank you.
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