BETTING ON ZERO: Hamptons Film SummerDocs Q&A with Alec Baldwin, Ted Braun, Bill Ackman

without further ado please join me in welcoming the film's director Ted Braun and quick quick apologies I think a little tiny snippet of the film was just clipped off at the end accidentally see do you want to just tell us really quickly Ted what we missed there she eightieth ramirez the the chairman of the FTC simply responded the reporter's question that that she did not endorse the statement that her life was not a pyramid scheme okay and then we have one of our special guests joining us please join me in welcoming Bill Ackman now are you sweating because it's warm in here are you sweating because you're reliving the agony and the ecstasy of this situation you know I I maybe it sounds strange to most of you but I just it moves me to tears to watch this it really does and I went to the men's room and try to wash off my face you wouldn't know now would you see yourself I always ask people this who they themselves and whether it's some events in their life or some campaign of theirs or what have you with this effort you have made when you see yourself portrayed in the film what's that like did you did you like what you saw when you first saw the film oh I really think it's an important film I think it's an important subject you know the part that moves me you know and I when I was in that church in Chicago I also had a prayer circle because I didn't but you know these people are so passionate and they're they've been you know so harmed and I'm trying to help it's just very very frustrating things so just watching the film I love this woman Julie Contreras I think she's an incredible human being so I want her to see you know giustizia it's just time well I think you know I mean I don't have I have like a zero business acumen I'm like the last person you want to give your money to to invest but I know nothing about business and so forth and investing but when you do this I mean you've been extraordinarily successful and your company has been extraordinarily successful so when you make a decision to do this to the extent you can kind of encapsulate for us how does that work when you decided to I don't want to say attack but if you want to in whatever word you want to use to take on the Herbalife situation over what period of time do you evolve that idea so that I had a analogy this is my second such adventure like this the first was a company was pointed out in the film called MBIA and it took me seven years to be you know when short-selling is something that's inherently unpopular people think of it as sort of on America and you're betting against a company how can that be good for America and so we our rule is that we won't short a company unless we think it's good for America for the company to go away right so there fortunately there aren't that many businesses like it you know if Madoff were a public company you know I hope we would have found it and shorted it and gone public to to expose it but you it's a very lonely place to be a short seller because everyone hates you right the the shareholders hate you the management hates you and then the the media surprisingly you think of journalists as you know investigative journalists would be very interested in the contrarian point of view but remarkably they hate hedge fund managers more so you know it's not a popular it's not a popular place so this is a race to the bottom in terms so you know so after the MBIA battle which took seven years and ultimately was very profitable for my investors actually guys what's fascinating about the MBIA example was no one listened to us the stock would just go up and up and up and up and then finally one day at one of our many presentations I said they're very honest everyone says they can't believe me because I have a you know a profitable interest in the outcome what's fascinating about that is by the way everyone who goes on CNBC to talk about a stock they like also has a profitable outcome your interest in the outcome you know Michael Johnson has a you know owns have millions of stock options he's got a very you know incentivized you know sort of alchemy so in the MBIA case I said look I'll tell you what I'll give up I'm gonna give away a hundred percent of any money I make from the failure of this company when it fails the stock was at an all-time high that was the high it went from seventy two to three fir made a billion half dollars I made a hundred and fifty million dollars now what's really interesting is when you commit to give away one hundred percent of the profits from something when you're in a loss making position it's a really easy thing to commit but then when you actually make the money and you have to give it away it's interesting and I didn't have 150 members when I made that bet anyway so that became funds I used to start a foundation and so you know a lot of good came from it and I figured in the Herbalife one when I launched it up the first day I said I give away a hundred percent of any money I make from this because I figured that would help address the issue what I didn't expect was for Carl Icahn to show up and that is what dramatically had changed the outcome here did you have a relationship with him before I mean you knew each other obviously it did yeah we were tight yeah were you buddies I mean Carl is four icon to call you arrogant I thought my god what nerve yeah he's charming he's funny he's a great guy to go have dinner with I bumped into him at the US Open the finals it was raining we talked for hours you know we've sort of sort of made peace on this one but he's a ruthless killer and he would consider that a compliment as he selects these projects on a very very careful basis watch this segue you select projects you do what was it about this story that made you want to commit years of your life to make a film about there were two big elements I like one was it had a tremendous element of surprise about it sort of front loaded hedge fund managers taking big public moral stands are not everyday news and Bill himself was fascinating and the other element was that the company itself stood publicly for all sorts of things that most Americans I think value health nutrition and a shot at realizing your dreams but as being accused of a pyramid scheme something had to give and I figured whatever way it unfolded would be surprising and I as a human being think that humanity's capacity surprised one another is something that's inherently interesting the other thing was I had made a film in Sudan previously and while I was there in a very very different circumstances from a certain news this film I was sensitized to the role of money in American life it's its core place in a lot of our values and I thought that this subject matter would allow me to explore that I was surprised the film ended up being much more about fact truth and justice though obviously money is the the medium to which this this battle took place the I remember in the 80s when I first lived in Los Angeles and was looking for work and everywhere you drive around it would say lose weight now ask me how and as you'd head down to LAX there with a big giant shimmering herbalife building in West Chester or Playa del Rey or wherever it was and and yet in my life since then I don't see herbal life or interact with herbal life in any way I don't see them do they sell all of this product in the US or is the mostly overseas what's interesting is the reason why you saw it then is when Mark Hughes started the company they originally went after middle-class white people and so it was very visible to a you know you were a middle-class white person at the time I assume now he's changed but now they go up must give now they go after you know poor Latinos in the south side of Chicago so they're not you know marketing to you I'm the only reason why rich white guys are aware of this is because it's on CNBC every day and it's become a Wall Street story but impairment schemes and they're on the logo of I mean they're on the jersey of the I mean with John Johnson professionalize the marketing in a brilliant way and made and actually made it a global brand but you're not the target market they used up the middle class for the most part and so therefore they had to go find another community in the US but they do sell on the US sure but you can't buy in any store you have to be approached by a distributor now they say in the there's that quote obviously that it's not a good idea to bring a moral issue to Wall Street I've always the woman that makes that same Christine Richard Wright and woman that launched a thousand ships miss her it was her research that got this all rolling right and no no when you were doing this I mean I'm assuming that there's a time you know you thought it's time to get out did you do you must have had some moments of doubt about the soul the only time we considered getting out was that moment which was captured in the film you know I I'm a fiduciary for other people's money so I can't spend other people's money to pursue a moral campaign of mine I can make an investment where it's in the best interest of the country it's morally right for the investment to work out in fact if you're a short seller you want an investment like that because those are ones where the government's most likely to take an interest it became a certain point in time where our political advisors were saying look bill it may be the case the government will do nothing here because they're afraid of picking winners with between a short seller and a you know another billionaire and I said you know what I didn't really when I got into this I didn't know about the Latino community I hadn't met the victims at this point in time I was like okay you know let's just wrap it up and if I'm interfering with the government doing the investigation shutting the company down then I'll cover the short position and we had our Advisory Board meeting and actually Allen Modell was here is on our advisory board and we were literally talking about I was like well let's talk about it should it should we cover and that's you know literally five minutes later the trader called in and said Herbalife stocks halted and that's when the FTC announced its investigation it was really kind of a remarkable thing so they stuck with it from an investment perspective because the investment only got better what I mean by that is you know the investigations were launched we've been working closely with the FTC for you know a couple of years now we've been sharing information with him on a very regular basis and we're very confident they get to the right answer now what's fascinating in the film the story goes on because the FTC came out with the most damning series of findings about Herbalife of any pyramid scheme they've ever gone after the only difference between their findings here and the other ones is they settled with Herbalife and they settled with Herbalife because they were afraid which I find why do you think were they afraid they were afraid because Herbalife hired Boyce Schiller Herbalife hired Gibson done Herbalife hired Madeleine Albright Herbalife spread a lot of money in Washington you know they and they were afraid and to the government I give a lot of credit to the FTC for their findings but in order to settle Herbalife wouldn't settle if the FTC made reference to a pyramid scheme in their settlement and the FTC focused on just the facts and to their credit are making the company changes business business in a very dramatic way which we think will cause ultimately the company to fail what Herbalife has done is something remarkable from the date when when the settlement came out they leaked to the press that the FCC had determined that they're not a pyramid scheme which is false okay and then that story was picked up by The Wall Street Journal and that became the narrative drove the stock price up the way the press writes stories if the stock goes up they assume whatever it is is good for the company and that became the narrative and the narrative has continued now this talk is actually you know could decline somewhat but ultimately the uncover do you think it'll it'll start to crumble yeah I mean the FTC found it to be a permit scheme if you take their complaint and compare it with the complaints and fortune high tech and this vemma these two pyramid schemes they shut down much smaller they didn't have as good lawyers they didn't have the political connections it's identical you know the findings are effectively identical and you know the most there's a you know if you look at the the interviews of these guys I mean Johnson is incredibly slick the president you know sitting next to my daughter who's ten years old sitting in the back and she says daddy that guy scares me that's like I des Walsh the guy looks like Voldemort I mean it isn't interesting how crooked people look crooked anyway but yeah we're gonna get there it's just a matter of time actually I think in the film once it's properly distributed it could have a catalytic effect because I think once people actually understand the story I think the film does an excellent job and help you understand the story so it's interesting where the documentary becomes you're kind of like blackfish you know in with SeaWorld becomes the catalyst it reminds me of friend of mine years ago there was a bar that he really loved it was his favorite bar and he would stop by and go there and have a drink you know most nights and the way home from work and Hollywood and it closed and went out of business the landlord took away their lease and they opened up like some kind of a clothing store and he drove past that corner he said he drove past every day on his way home from work and and put a hex on the clothing store and prayed that the clothing store would go out of business because it it uprooted his bar and he said and sure enough 18 years later the clothing store closed and went out of business and I hope that we don't do the Bill Ackman story and there's a scene where you're like 89 years old in a wheelchair and a blanket on your lap by the fire and a grandson says grandpa guess what your verbal life is folding is that so for you it's you're you're in it for a longer haul yeah so what I've said publicly is on the investment side I only keep the investment part of it if it makes economic sense for my investors if it doesn't make economic sense I'll cover the short position but I will pursue it you know I promised Julie that I will pursue this to the end of the earth and I will pursue this to the end of the earth period how does this fit this is this is a terrible thing to say but it's like in films you do get seduced by this you you come across as like very winning and very charming in the film you're like you're very you're almost lovable in the film you know in this quixotic kind of way but but but the how did this change you it's exciting I'm actually very lovable right and the problem is that the you know I have this interesting experience I meet people for the first time and they say bill I had a very different impression of you based on what I read in the newspaper I don't know that maybe this movie coming out party you seem actually also like a nice guy I know the but and I'm very charming thank you Bill now by the way we we we think that this film is just is such a great thing for you that should you eventually win and you'd like to unload some some portion of the profits from that situation the Hamptons International Film Festival more than happen that's easy to set up Zizi development chair and documentary filming so just just not to forget the victims what so we've given fifty million dollars to the undocumented Latino communities so if you want to hear of a couple of good charities Don Graham who these I guess the air to the Washington Post former CEO of Washington Post company started a charitable foundation to fund scholarships for undocumented kids and what's really sad is that if you're an undocumented kid and you're and you were eight years old and your parents brought you here from Mexico and you go to high school in the US and you're with all the other kids you go to school with and you've done really well and your valedictorian your class and you're about to graduate that's when you find out that none of the scholarship programs apply to you because you're not a legal citizen so he started the scholarship program we gave twenty five million dollars to that and then we're working with Robin Hood to identify maybe twenty five million dollar grant to Robin Hood to help you know the community you know the investment has been a disaster you know we've lost a ton of money but we didn't want to you know make the community wait and so but you know really been an interesting life experience for me you know I did not know anything about I don't even know what the word undocumented really meant and this is a you know the kind of sad thing about the election here and getting a little bit of politics but you know everyone in the room here is an immigrant basically and one of the great things about America is how welcoming we've been for immigrants and we've got to solve this immigration problem it's really important I just want it before you go it's one more question it and solving doesn't mean building a wall and sending people to Mexico so right where he was there any point where you got nervous you got scared that you were gonna get sued by these people who seemed very litigious some of them Herbalife itself or before we left the gates we were concerned right I was cautioned by many longtime very serious journalists that that we could expect at the very least to be sued and worse so were you not yeah so that yeah that was a concern from the get-go and and affected the way we structured the film we spend i personally spent and the production spent the better part of a year in active discussions with with Herbalife I met with Michael Johnson privately a couple of times once alone and once with the producer the film cleanse if ER I had discussions with several members of the staff I was interviewed by Gibson Dunn after about a year they said look we're gonna stay on the sidelines of this and we were respectful of that we continued talking with him up until the time at Wheelock picture but yeah I was concerned about the company's reaction to the film and 12 hours after we premiered at Tribeca they had an attack site up against us they swooped in and took a URL very close the name of the film and went after us and as some people know Randy Mastro who is my co-chair of the film festival is with Gibson Dunn yeah he's he's my co-chair of the festival and Randy actually tried to sue Newton and I just prevent us from showing the film I'm kidding that's a joke yeah but you're not out there are you Randy anyway so did you want to ask a question no I guess I'm just wondering now what else could happen with the FTC or is what happened sort of the final definitive thing and well the big question I think bill you probably have some perspective on this too is is enforcing the the court order once it's signed the the details of the settlement what I think completely invert their current business model and and got the profitability for any of the distributors and therefore the company in the United States it would seem that way it'll have to be strangely enforced but they have a an auditor watching what they're doing for seven years so so basically the in 1986 the California Attorney General found Herbalife to be a pyramid scheme found them making false and misleading statements and they entered into an $850,000 settlement and Herbalife committed not to do these various things that settlement that permit injunction was never enforced by the California Attorney General and Kamala Harris who is the AG from California would never meet with us she had a thousand complaints from victims in California she did nothing about them why cuz Herbalife is a very politically powerful force in California and she was interested in running for Senate at them because that's my interpretation and she and she did did nothing Herbalife was able to evade the California injunction for 30 years so I think they view the FTC well it's two hundred million instead of eight hundred fifty thousand and it's a very strict number of things that they have to do if they are if they are the settlement agreement is enforced Herbalife dies and they also will die more quickly if if the distributor's leave and so what they're doing now is they're trying to use the FTC settlement as literally like a Good Housekeeping Seal of Approval and one of things we did there's a website you can go to that we created called facts about Herbalife we made a little video where we show Edith Ramirez the chairwoman of the FTC talking about the terms of the settlement and then Michael Johnson in a video to the distributor saying how great this is for the company and it's one of the most amazing juxtapositions but I give the company 12 months 18 months I don't know something like that I don't think it will survive I think Michael Johnson goes to jail that's and with DES Walsh I mean there was another pyramid scheme called Zeek Rewards with the Department of Justice you know shut it down recently and the executives are going to jail I mean these Herbalife has taken twenty billion dollars from poor people in 94 countries I mean when you steal a hundred thousand dollars so we just deal TV you go to jail these guys stole tens of billions of dollars the FTC proved with their two-year investigation the notions these people stay out of jail I think is a crime and yet for people that don't mean you're very very good with the facts in this film and and for people to understand what's going on but one thing that I wonder is I mean the companies formed in 1980 so that's over thirty five years ago and over thirty five years it can't only be people dumped in garage fulls of product of other people and expanding somewhere people are drinking this stuff and consuming where is that well so first of all one of things we learned is that actually the FTC found the same thing is you have poor people buy this product they can't sell it what do they do they eat it because they have they don't I mean it actually is sustenance and you can live on this stuff or so it's like slimfast you can live in on for some period of time the reason why can go on for a very long period of time is there are four million Herbalife distributors two million quid each year so like they need to find two million a year that sounds like a lot but there's seven half billion people in the country and there are 94 countries I mean the world so you just need to find 2 million now if you have a film that gets Y distribution and it becomes commonly known in the public domain that the company is a pyramid scheme that will actually have a catalytic effect and protecting more people from being sucked in what are you working on next don't know the company I mean way the group the group that put together this film would would very much like to make a new picture set in the world of our corporate conflict we have we have a subject that we think will be quite explosive and we're not at liberty to reel it just yet but actually an complaint can I ask a Teta question yeah so one of the controversies first of all I had nothing to do with the creating a creation in this film the financing the film the distribution of the film etc I'm alive of course now there's there's a woman Devin who's here somewhere who was the Coxon for the first varsity Harvard crew team unfortunately was not on the first boat that was on the third boat but we were she was 2 years ahead of me at Harvard she's one of the producers for the film and Herbalife said AHA I must have been some kind of secret backer but the backer of the film who's in the audience so I met at the for the first time at the Tribeca well I'm told he's prepared to go public now and say who it is is that true clean quick call him out we could we I think it'd be very helpful for people know who actually backed the film because I think that would help address the sure know the the financier of the film is a guy named John pick thorn he's in the audience tonight as he was at the Tribeca premiere he has a company called Biltmore films it's managed by a guy named Burt Koontz who's also here in the audience and as I said we're very good to get a new film off the ground Biltmore films is up and operating and ready for more business so yes for people like this real quickly let's raise the house lights just a little bit and but that's good right yeah I'm gonna take some questions we only take a couple quick questions could be are running long on time that I want to make one last comment okay do we have any questions here anybody right right over here could you could you speak loud please we got well here's your mic primarily covered Herbalife's operations in the United States I'm curious how deep you went into international operations and how the FTC's ruling has impacted the way Herbalife is operating in other countries is that a question about the film are about bills investment the film the film we looked we looked at and studied their operations in in many other countries we look particularly closely at Mexico we also looked at what they were doing in Russia and China ultimately the the complexity of the subject itself and as Alec alluded to the difficulty of just dealing with the facts of the situation made us decide to focus on on US operations but the model and the work that you see in in in the u.s. is is mirrored by what's happening overseas another couple questions we everybody over here or in the back of there with your arm up actually we just add on to that question because I think what the person was also asking is what does the FTC settlement mean for these other markets so the FTC is the US only regulator they share their work and cooperate with regulators globally what we're doing is we are meeting with Mexican regulators you know when we met with them before we were a short seller and therefore we have less credibility now we can walk in with the FTC findings hand them to the regulator in Mexico and China and UK in Guatemala by the way Herbalife opened Burundi right you have to think they're kind of scraping the bottom in terms of the markets they're looking at me Burundi I mean the per capita incomes like a dollar 20 you wouldn't think these people want to lose weight the whole thing is crazy in the backyard we have at somebody's hand but they're yeah bill thank you very much it was a great film the one thing I need to know though because in investing you're not gonna just hold on forever okay and at some point in time investment was the guys that got in when you originally shorted it they have to be bleeding and and and at some point they would say hey I want to cut bait like when you buy a stock you know to make it simpler and you expect it to go up and you buy it at twenty and then you broke it thick as it goes to ten tells you what you gotta buy more you know I mean the point is at some point these people had to say hey I've had enough sure well we've already take we take we marked market every day so the losses we've had in Herbalife we've already experienced you know like every position in portfolio we look at everything every day I actually think it's the single best time in history to be short Herbalife we have the findings of the FTC the stock is trading at near an all-time high it's a supplements company Jim Cramer on CNBC said on Friday he said look at the supplements company trading at fifteen times earnings you can buy GNC at nine times earnings so it's an overvalued supplements company which is being required to completely change its business model the FTC is requiring Herbalife to only pay its distributors when sales profitable sales are made to consumers outside the system the FTC also found that there weren't profitable sales outside the system so it's a null set in terms of business going forward unfortunately the FTC is giving them until May to make the changes to the business models that's ten more months of defrauding people under the current model before they go to the next one so I think it's a great short I'm not recommending you short stocks very risky they might do a movie about you but I think I think it will be a profitable investment from here but we'll see a couple more right here when a lot of us came in there were people outside of handing out pamphlets and they were against this film I am assuming you also saw them yes and if you did what was your response to that and who sent them so those are those are people who know nothing about Herbalife nothing about me who Herbalife haven't seen the film who haven't seen the film who over life probably paid 100 bucks 200 bucks to hand out pamphlets you know they do this Orange I'm free shakes the shakes are the shakes tastes terrible so it's it's you know you should read the pamphlet they basically try to imply that I paid for the film that it's a it's not objective but I encourage you to read it the objectivity issue I just I mean I really want to underscore that we we operated completely independently ability you were actually quite wary of us when we first approached you I multum utley agreed to participate and and we spent as I said months and months trying to get our voice to actively participate and ended up putting up their point of view through the public material that they made available and through an interview we license from Giselle Fernandez it's I think in my mind from people who support over life that I spoke to do they said we didn't miss a data point it was very fair presentation their point of view this didn't start as an activist film it started off as a film of inquiry and curiosity and we worked completely independently of Pershing Square and of Herbalife and as you could see the the experiences the distributors the experts as well as Pershing Square were verified by the FTC statements that's why we included them at the end of the film and the statements of Herbalife's executives were we're pretty well gutted by what the FTC had said we have time for one more for somebody we're right there in the orange go ahead yes get the most eyeballs to see this what are the plans for distribution we're in active discussions with a number of distribution companies now and we hope to have news to announce fairly shortly by the end of the month God willing well I just want to say that a couple things one is that our next screening is August 27th August 27th that Saturday is our last summer dock which is the what we're calling you know the classic documentary the perfect candidate by RJ Cutler and David Van Taylor about the Chuck Robb Oliver North Senate race in Virginia in 1996 94 44 brother and and thank you all we're sorry for the little technical difficulties and I want to finish by saying that I mean at the point that you realize I mean this is a I don't know you but I feel I get to know you through the film at the point you realize I've said this to other people before that you realize you've made enough money you've been very successful financially which is a wonderful thing we I always find it's funny how people in America there's the envy where we're in America well I got that part of the deal was you know you try to succeed as best you can it we have this wonderful game board here we can play on people can make a lot of money but people are like well we don't wait to make too much money if you make too much money than then you're a bad person yeah I'm always kind of mystified by that that discussion of damning people who are wealthy and so forth but I hope that at the point you realize you've had enough that you do something else with your life because I think there's a lot of other things inside you you could do with your life other than make money and there's a lot of but I think there's a lot of great things you could do to help people you seem like a very compassionate person of course you're monetizing this a thing and it's part of your investment career but at the same time there's the the guy you see up in this film there's a lot of other things I'd like to see that guy to this very well then that guy up there is more interesting than just that one kind of career so I'm trying to compliment you anyway thank you all for coming thank you thank you

Channel: HamptonsFilm

Views: 15,976

Rating: 4.944056 out of 5

Keywords: betting on zero, herbalife, documentary, hamptons film festival, hamptons, ted braun, alec baldwin, bill ackman, hedge funds, wall street

Id: Y-2-2fzCwNU

Length: 32min 39sec (1959 seconds)

Published: Fri Jan 12 2018