Closing Bell - Closing Bell Overtime: State of the Rally 3/30/22

Episode Date: March 30, 2022

Dow and S&P 500 snap a four-day winning streak. Is the rally running out of gas? Tom Lee from Fundstrat Global Advisors says, “We’ve probably made the low for the first half of 2022.” Plus, veteran trader Mark Fisher of MBF Trading explains why he prefers natural gas over crude oil. And, Bank of America’s Jessica Reif Ehrlich has a bullish call on Disney and says it is “hitting it out of the park.”

Welcome to Overtime. I'm Scott Wapney. You just heard the bells. We are just getting started here. In a moment, we'll be joined by Halftime's Josh Brown to give his read on the markets. We begin, though, with our talk of the tape, the state of the rally and whether it is running out of gas or simply just taking a breather. Let's welcome in Fundstrat's head of research, Tom Lee. He just put out a new note on stocks. Welcome back. It's good to see you. Great to see you, Scott. You say that stocks are, quote, whispering bottom. What does that mean? Well, I think stocks are communicating a very different message than the apparent macro that we're seeing, because it's obvious there's inflation problems. Restoration of hardware

is making that pretty clear. And we know the Fed's quite hawkish. And we know there's even commodity risk because of all this, the Russian-Ukraine war. And so I think in general, we should be really cautious about the macro. But at the same time, the stock market is acting far more resilient than what we expect. In fact, over the past couple of weeks, I think there have been a lot of quantitative signals that have really signaled bottom, whether it's excessive 1% days or positioning. And in the past, it's always been better to listen to market. And I think it's really whispering pretty loudly that we've bought it. Yeah, but I mean, whispering implies that you're not ready to yell bottom. What gets you there? Well, you know, I think with each day that's passing, we're a lot more confident that the glib answer is if we make new highs, then it's really validated that we've bottomed. But so far, you know, we're above the 200 day. It looks like we've broken the downtrend.

I'd love to see more strength from technology. But Scott, I would say I think it's our sort of view is we've probably made the low for the first half of 2022 on through 24th, February 24th, which is the day of the invasion. And hopefully this all translates into the markets holding and then being very strong in the second. That's an interesting headline, and that's what it's going to be. We've probably made the low for the first half. I think that's what people are going to hang on. Jonathan Krinsky, who I know you know of well, put out a note this afternoon that said, quote, while we're nearing April, historically a strong month for equities, our sense is the recent rally has borrowed from some of those gains.

Do you agree with that? Again, yeah. I mean, there's a lot of logic to what Jonathan's saying, because, you know, if we just think about how the next, you know, 20 trading days will look, I don't think we're going to necessarily get positive developments because, you know, earnings might be challenged. We're going to hear companies talk about supply chain issues and inflationary pressures. But the stock market is hanging in there pretty strongly. And I think it's because, you know, institutional and retail investors sort of position for a recession

in early March. And now if we don't have one, I think stocks have quite a lot of upside. Yeah, but we're going to be on the clock the moment that the yield curve inverts, right? I mean, you know that, and that's going to start dominating the narrative. So how do we get over that hump? Yeah, the yield conversion is a big deal because we know a lot of people are watching it and we know a lot of systems and algorithms are going to react to it.

But we did put a pretty big study out on it this morning that one of the reasons why you might have to mollify or reduce how much weight you put on the yield curve is that the yield curve right now is reflecting what we call inflation backwardation. Meaning, if you look at the inflation curves, which looks at the tips and nominal yields, bond market yields have to reflect what the market's expecting for inflation, and the market is expecting an inflation spike in the near term, but in the out years, pretty normal inflation. That means that the sort of normal yield curve is going to be inverted, but the real yield curve is actually quite normal. That's something we highlighted, and that's very different than 06 in 2019, because at that time, the real cost of money adjusting for inflation actually didn't.

But the Fed was indeed raised rates enough that real money turned expensive short term. Today, the real cost of money in the two year is actually still very cheap compared to 10 year money. And I think that chart actually is highlighting that. Look, there are people who are clearly suggesting as well that if you're looking at the 210 spread, the yield curve, maybe you're looking in the wrong place. Leisman and others have have made that point. Let's welcome in Josh Brown, obviously from halftime into the conversation. Tom, I'd like to do that. So, Josh, I mean, if you look, it's good to have you back. If you look at the rally, utilities have been doing really well. It's been very top heavy, led by Apple and some of these other names. Does that cast any doubt over the substance of

this rally? How valid, if you want to use that word, it actually is? The rally was pretty textbook. Technically speaking, the stocks that had been beaten up the most were the ones that led the advance. I wouldn't say they bottomed first, but they definitely put on the firework show. And a lot of that is now being unwound. You have ARK off 4%, Peloton down 9%, Roku, Shop, Roblox, Teladoc. All the names you would expect to be the worst performers when the trend resumes, the primary trend resumes, are the worst performers. When I talk about primary trend versus counter trend,

it's not jargon. The primary trend for most stocks in the market is down, has been since last February, by the way. Most stocks, not all stocks and not the biggest stocks, but for most stocks, they peaked over a year ago and they've been in a downtrend. The counter trend is what we just experienced over the last week where they've been having this rock and roll rally. It's falling apart pretty quickly.

You lose three days in one day. And that's very, very textbook, very typical of how a bear market rally ends. In the meantime, what's the prevailing trend? What's the real trend? WTI up 3 percent today. Look at the energy stocks rocking. Look at consumer discretionary underperforming. This is what the real trend is. And I would tell you one other thing. So it's actually not complicated. It's actually not complicated to be in this market right now. I think if you think about the VIX as like the

simplest shorthand for how people are behaving, we're in a fairly well-defined range. We're in a VIX regime where whenever you see us 28, 29, get your buy list ready because that's overdone. And then when you see us down it, we hit 18.9 yesterday on the VIX. That's pretty much as good as it's gotten. And that's been the case since March 2020, this new VIX regime. So it's not that complicated. It's kind of, Judge, it's kind of like, go ahead. I feel like we have a distinct difference of opinion here on something that's important. I've had Tom Lee just come out and suggest that the lows for the first half are in the market. And I might also suggest that a first half that he had prior described as being treacherous.

And certainly he was correct. I still hear you using the term bear market rally. It sounds like you think that's what this is. And Tom Lee, do you take issue with that? Is that what this is, Tom Lee? Well, we're in that no man's land zone where neither of you can be decided and we'll only have the answer if we make new highs. I would probably say the higher probability in our minds is we're going to make our way to new highs this year, even before the first half. So I would still view this as the market had a huge correction, priced really, you know, more than 40 percent of stocks priced

a pretty deep recession. And if we don't have that recession, stocks are really better to buy. Josh, and before I let Tom go, I want your rebuttal to that. Why is his view wrong? I actually don't think Tom and I disagree. I'm giving you the range. I'm not saying this has to get disastrously worse. And I would never rule out us making a new high before the end of this year. Understand that stocks three out of four years finish the year up. So I don't want to give you

the impression that I'm telling you it's hopeless. I'm giving you a very well-defined VIX regime that's been in place now. We're going into year three of this. It works pretty well. Won't work forever. But remember, we were in a 10 to 20 regime. The VIX would hang out at 10, 11. CNBC.com would write articles about how traders can't make money on Wall Street, right? Remember that? And then you would get these spikes, but the spikes would go to 20. Now it's a different game.

The Fed is not on our side anymore. They're removing liquidity. They're hiking rates. They're talking about hiking rates when they're not hiking rates. So now it's 20 to 30. You saw the movie The Irishman, right? So when the guy pulls out the gun in the courtroom and points it at Al Pacino and then his son comes running over and pulls it, what does he say? He explains. He explains. You charge when it's a gun. When it's a knife, you run, right? When the VIX is under 20, you already know that you're at the more placid end of the pool.

It's not going to last long. But when you're back at 28, 29, 30, which is where we were right around March 14th, March 15th, before the Fed, that's when you have to be doing your buying. You have to buy something. So this is not about taking your portfolio to fully invested zero. It's just about being aware this is the environment. I wish it were other, but it's not. It's not that bull market. It's not that low volatility grind higher. It is not that. It's this. I don't know. Ed, you're Jenny today on the half. Tom Lee, our our conclusion is that this is still a bull market. That's what he said.

5,000 to 6,000 is his range on the S&P. And this is a guy who was talking not two weeks ago about stagflation. Today, he made the point with me on the halftime report that even if you have stagflation, that the stock market can go up in the face of that.

I feel like everybody is now trying to make a more bullish case when not all that much has changed in the last couple of weeks. Yes, Scott. I mean, and I heard that interview. It was really useful. You know, first of all, the real cost of money tenure is still negative because tenure inflation break evens are higher than where the nominal is. So it should argue for PE expansion. But I think compared to two weeks ago, the market had a huge test because we had, I think, a lot of negative developments in headlines over the last two weeks. And instead of the market falling further, it was kind of revealed that people had positioned

really for already a lot of this and markets have been really resilient. So I would say it's another reason why I think the market is whispering we've already bought. Maybe more than whispering. Tom, do you see a signal in what's going on with the home builders? Because I've been spotlighting this on the show all year. These stocks, I think, are important economically, right? They're not gigantic

market caps, but the ITB names, the XHB names, I think there is a signal there. And Tom, I know a lot of your bullish thesis has been predicated on household formation, demographics. And obviously, when young families buy homes, it prolongs the expansion. We might have just seen the bottom in housing inventory for the cycle. And the mortgage rate, 30-year mortgage rate has exploded in the last six weeks. So what's your take on whether or not we should be looking at the home builders and at all concerned with how horrific those stocks have been? Yeah, Josh, I'd agree. Housing really punches above its weight because housing activity itself is such a huge GDP contributor. You know, every 250,000 homes is almost three quarters of the GDP and every new home built creates four full time job equivalents.

And housing is certainly going to have to pause here because rates are rising. It's affecting affordability. And anybody in the Northeast knows that the market volatility has actually cut wealth. So people are sort of taking a pause. I do think that explains why the home builders are really weak when they should be seasonally very strong right now. But I don't know if it's a decisive proof that the consumer is turning because, again, I think over the next month we'll have a better sense of the consumers getting weaker. But so far, they look pretty resilient. Yeah. Tom, I got to let you go. I appreciate your time so much. And I know we'll talk to you again soon. Josh, you're going to stick with me. And I do want to drill down with you, Josh,

on the Apple issue. We're going for three trillion dollars in market cap. We didn't get there. We're going for 12 straight days, which would have tied a record. We didn't get there. But it's been a magical run for that stock. And I wonder how you look at that in the big picture, whether it's, quote unquote, good for the rally that Apple has done what it has or if it's bad, because it it just signifies how top heavy that things had gotten and that the FANG stocks have really gotten off the mat. If you throw in NVIDIA in there as well, the gains off the bottom of not that long ago, still in the month of March, by the way, have been astounding.

That's true, but if you think about it, if you pull back the chart a little bit further, the gains off the lows have been astounding. This stock is right where it started the year. And I think Apple's really interesting. It does get treated a little bit like a football when there's geopolitical issues, but really more so to do with China and Asia, which is significantly more important than anything going on in Eastern Europe or Russia. So Apple was able to look past that. Look, there are people that talk about this in terms of it

being a hedge. So if you're worried about inflation, you're probably not running to bonds, right? Bonds are not helping you. In fact, we've just had the worst drawdown for the global bond market index since 1990. So what is the hedge? Like, what can you do? I think a lot of people have identified stocks like Apple, where they've got all of the things that you want them to have to be a hedge. They've got, first of all, no one particular geography other than the United States is make or break, although some are more important than others. There's no one country is what I mean by that. They've got a fortress balance sheet.

They've got a dividend and a buyback that are escalating. So it's got that inflation protection built in. They themselves own a ton of treasuries because of the cash pile. The buyback's important. And then you just think about the other holders of the stock. You could feel pretty assured that Berkshire Hathaway's not going anywhere. The majority of the world's largest pensions, retirement systems, sovereign wealth funds that own Apple, probably that's the last stock they'll panic out of. So I think people have looked at that name like a defensive name. I wouldn't call it a treasury, but I would say it's the treasury of the stock market.

Will that change materially anytime soon? I don't think so. So I'm long the name. I think you could be long here. You're still going to have volatility. But the snapback in that stock is not surprising at all. Yeah, maybe in the days ahead, we will, in fact, be talking about closing above $3 trillion in market cap. Josh Brown, appreciate it very much.

I'll see you back on the Halftime Report soon. I know we will. Hey, check out these findings from the CNBC Delivering Alpha quarterly stock report. On what Josh was talking about, we asked about 400 market participants, which asset class they will most aggressively invest in for the rest of the year. Maybe not surprising, the majority saying stocks at 59%. There's real estate in second at 17. Cash right in the middle there.

Crypto pulling up the rear at 4%. I want to know what you think, though. Is it stocks, cash, bonds, or crypto? Please vote in our Twitter poll at CNBC Overtime. We're going to give you the results as we always do before the end of the show, which we are just getting started on in the OT. Up next, legendary energy trader Mark Fisher is with us on the biggest opportunity in energy right now. And it's not oil. Intrigued? He'll tell you where next. And later, throwing in the towel, Bill Ackman says he is stepping away now

from activist short selling. We'll talk about what's next for the billionaire investors. Stay with us. Overtime's back right after this. We're back in overtime. Oil prices are up today, but it's another part of the energy complex where our next guest sees the most opportunity right now. Mark Fisher, the managing member of MBF Trading. He is known as one of the best commodity traders ever. He's back with us. And this time he's in our new program, Overtime. It's good to see you. Hey, Scott. I set this up specifically. I mean, you know, there's so much conversation, obviously, about crude, you know, got up to what, 130 or whatever. But it's natural gas that actually

piques the interest of you the most in terms of a place to make the most money, which our viewers always want to know where that is from somebody like you. Why is it NatGas? Well, the last time I was on was in the middle of March, and I think NatGas prices for this winter have already rallied 20 percent from $5 to about $6 in three weeks. And on a risk-reward basis, I just think it's a much better trade than crude oil because of what's going to happen between now and October. The marketplace needs to go ahead and build up reserves for this coming winter. Producers are not hedging as much. The index funds have to go ahead and roll to this winter.

They have to buy, I don't know, 300,000 contracts. The administration just said that we're gonna supply 15 billion cubic BCFs to Europe, I don't know, by building out LNG. Russia may be taking off the map in terms of their gas exports to Europe and to other places. And so to me, the clearest trade is natural gas without having these wild swings that you've been having in, you know, front month crude the last two weeks. What what makes I mean, if we're looking at the May contract right now on the screen, if you were talking, and it was about $5.50, $5.55 or so, what number do you have in your head that makes reasonable sense where NatCast could trade because of the flurry of things that you just mentioned? Reasonable sense, there's no such thing as reasonable sense in commodities.

That's the first thing. The second thing is, I'm not really focused on May. I think I'm more focused on this winter, December, January, February. For instance, January is trading about almost six bucks. Where can it go? How high is high? I don't know. But again, last time I was with you, naturally, January is trading five dollars. You know, when Europe traded three hundred dollars equivalent two weeks ago, you know, people are going to be scared in anticipation of what's going to happen this winter. And without enough financial intermediation to be able to hedge properly for producers, you can have a lack of selling.

And just mathematically, you have all these index funds that have to buy the winter in the next couple of months and who are they buying it from so main after gas at 555 you know can the market you know have a big rally today can it go past six six six and a half dollars maybe but i'm really concerned that the winter can go eight nine ten dollars wow i mean one of your suggestions is clearly it seems to be that what the EU wants to have happen in terms of stockpiles being 90 percent full is impossible, that there's just no way that that could happen. And also, if we said, well, you know, well, the U.S. can just export more LNG. We don't have the capacity to do that either. Well, first of all, LNG, you have to build the LNG plants. It takes now longer to actually permanent LNG plant than it is to build it. But you can't just take natural gas from this country and FedEx it to Europe. You need to go

ahead and build an LNG plant. You need to build a receiving plant over there. You need to have the ship capacity. It takes a while. But I don't know how it's going to you know, how that is going to work. But to me, OK, the winter in anticipation of the winter, I mean, we may come here October 1st and stocks may be full in Europe somehow. And that may be the top. But between now and October, it's the handwriting has been on the wall and it continues to be on the wall. Although I probably set the short term top right here just being on your show. So you said that last time. I don't think you did this idea of weaning the world, so to speak, off of of Russian energy. Is that anything more than just a headline?

What are the possibilities of that actually happening and legitimately happening anytime soon? You see, it's interesting. What will happen is if the West and Europe shut their shut off the Russian spirit, I don't know how they would do it. Then obviously all that Russian production, both in oil and natural gas, would just go to Asia. I mean, you talk to if you listen to what Dan Jergin has to say, it's going to go to Asia. And what will end up happening is a lot of the production that's in Asia, a lot of the carbos that end up in Asia will end up going to Europe. So, you know, can it really happen?

It depends. You know, I don't know how it happens. I'm not, I don't know how it happens so fast, but I do think that you're going to have this whole cycle of what happened because of the fear of of it of Russian of this Russian disintegration more than actually it happening can you can it can the can the world the commies actually move away from Russian gas that soon can we we that's almost to me almost impossible you still like the the back end of the curve yeah that's right's right. Yeah. Well, yeah. To me, every time and every time I saw my trades, every time you get one of these headlines and crew goes

down six, seven dollars, it's much easier to buy the back of the curve that gets if the spreads allow you to to buy the back end of the curve, because, you know, you buy to me better value. You know, why would you want to pay to pay 105 dollars where in six seconds the market can be down ten dollars as opposed to longer term if you really believe in this commodity boom cycle like i do that eventually crude's not going back below 75 80 dollars so buying these 23 you know 85 dollars 90 you know it represents better value than going ahead and punting in the front where one headline can you can lose ten dollars in 10 minutes. So you the last time you were with us, you said you expect OPEC to increase supply. I mean, we're on the doorstep now of a meeting. Do you still feel that way?

I still feel that way. But again, I've been wrong so far on that. I think they've been holding out a lot more maybe because of the Iran situation. I don't know. I know there was a you know, I'm not a politician. I don't know. I'm not sure. But I would I would have thought by now you would have had an OPEC response. But probably wrong. Now, Bart, lastly, before I let you go, I mean, barring a headline that none of us can foresee and we'll make that the caveat to everything, as I know you always think about. Does it feel as though at least the current contract in oil, the one we've been looking at, one hundred and seven dollars, we'll call WTI. You feel like oil has topped out, at least in the near term, barring an unforeseen headline? No. I think the long run, like I said last time, I think oil without it is still going to be in the vicinity of 100 to 120 for the rest of this year.

I mean, look what they just did in California. They're just allocating. They're going to give consumers two checks of $400 each to go ahead and be able to buy, you know, to be able to afford more gas, to be able to afford their gasoline purchases. That doesn't affect supply. That just gives people more money to buy something that there isn't enough of. We need to create a situation where there's more supply or create demand destruction, not just throw more dollars at it, which makes an inflationary spike even worse. It just gives people more money to spend to buy what they can't afford to buy now does that make sense yeah you still like range resources i got

to go though but i i know it's a stock you've talked about before that nothing's changed nothing's changed all right i appreciate talking to you as always nothing's changed there either mark fisher thanks for joining us take care scott all right that's mark fisher up next trading in a choppy market. Our next guest highlighting some under-the-radar names you need to know about because he's betting on them amid all this economic uncertainty. Plus, the new Bill Ackman. He says he's done it with activist short-selling.

We'll discuss why and what could be ahead next. Overtime's back right after this. Welcome back to Overtime. It's time for a CNBC News Update with Shepard Smith. Shep? Hi, Scott. From the news on CNBC, here's what's happening. More direct aid to Ukraine on the way from the White House. The news coming after President Biden and the Ukrainian President Volodymyr Zelensky spoke for about an hour this morning. The White House pledged an additional $500 million. That brings the total aid to about $2 billion in humanitarian and security assistance.

It's all part of the $13.6 billion that Congress approved earlier this month. Judge Katonji Brown Jackson has at least one Republican supporter, the Maine Senator Susan Collins, saying that she plans to vote for Jackson's confirmation to the high court. She says she's convinced that Judge Jackson is qualified and will not be bending the law to meet her personal preference. And the death toll rises in a massive interstate pileup on Monday in Pennsylvania. Now six killed, 24 injured. That from state police today. They blame a snow squall for that crash, and they upped the number of vehicles involved to 80 cars and trucks. The stretch of I-81 finally reopened for morning rush today, some 45 hours after crews finished clearing the crash site.

Tonight, hope for a new drug for Lou Gehrig's disease, ALS. But is the FDA on board? Meg Terrell breaks it down for us on the news right after Jim Cramer. 7 Eastern, CNBC. Scott Beckett. All right. We'll see you then, Shep. Thank you, Shep Smith. All right. Big opportunities in the areas of food and energy independence is where our next guest is looking for big returns. Eric Jackson, the founder and portfolio manager of EMJ Capital. He joins us now. It's good to see you. It's been a while. Welcome to Overtime. Hey, congrats, Scott,

on the new show. It's amazing. I appreciate it very much and I appreciate you being here. These sound like themes that maybe were developed recently because of some of the geopolitical issues that we are all witnessing. Is that right? Well, you know, when the pandemic started, Scott, I think our knee jerk reaction was like, oh, this is this is strange. How long is it going to be? It's going to be a few days or a few weeks until we get back to normal. And we really haven't gotten back to normal. I think with this war in Ukraine, there are going to be some lasting changes. And as you just mentioned, I think we've all realized over the last few weeks, we need to have an energy independence. We need to have food independence. We've come to rely on the sort of just-in-time

manufacturing, whether it's semiconductor chips, and we've seen how that can come apart. And now we've seen, you know, if we're buying incremental barrels of oil from these world nation states, that doesn't do us any good. So we all understand we've got to bring that home, but that's going to take time. And so I think those are interesting things to look at. I mean, you're taking it literally to the micro level in terms of energy independence with a stock like Generac. I mean, that's what it feels like. It's really taking it to your home. How do I make my home energy independent? How do I get off reliance on the electrical grid, which might fail for whatever reasons? I think that is interesting. Generac is becoming kind of a

must-have in most people's homes, just like cable went from nice to have to must-have. Home security systems, the same thing. I think people realized during the pandemic that you want to have a backup generator. But now people like Generac, also Enphase Energy, they're really providing a soup to nuts type solution where you create energy from solar, you store it in a battery pack at home, and when you need it, power is there. You're completely self-sufficient. Generac's been held back by some manufacturing issues. They've addressed them now. They've got a huge plant that's operational in South Carolina. And I think it's got a long ways to run still. We're showing Enphase Energy, which is another stock that I know you like.

There is one on your list that I'm not sure people are familiar with. And full disclosure, the market cap is only $1.3 billion. So it's of the smaller variety. Obviously, there's not much volume in overtime, as we're calling it as we talk about it. But it is of the smaller variety. Obviously, there's not much volume in overtime, as we're calling it as we talk about it. But it is Friar battery. Can you tell me about it and why you like it as one of your top picks? Well, you know, EVs obviously are part of this energy independence theme. I think we understand the value of having an electrical vehicle. So Friar is an EV battery maker. All these companies, whether it's GM, Ford, you know, all the European manufacturers, they obviously want to copycat the Tesla. They've got to create their own battery system. And that's the most costly part to go in these

cars and trucks. And so Freyer is a pure play Norwegian-based EV battery maker. They're a SPAC. So they are sort of, their stock has been, you know, hit way down. But they are delivering the goods. They're delivering it from a geographic location that's politically, you know, interesting for any European car manufacturer or American car manufacturer. So they have a big JV recently now from Coke here in the U.S. as well. So I am a big believer in that. Yeah, we're seeing a big JV recently now from Coke here in the U.S. as well. So I am a big believer in that. Yeah, we're seeing a big move. But as I said, and that's why I wanted to have that caveat out there about the smaller market cap

and the volume or lack thereof as we're having the conversation, just given the time that it is. Lastly, tell me about App Harvest, why you like that one. So unfortunately, I think we're staring down a food famine in about six months' time, Scott, as another overhang from the Russian invasion of Ukraine. So what does that mean? That means wheat, soybeans, corn, not necessarily here in North America, but in poorer countries of the world. There will literally be famines in six months' time. Price of food commodities are going to stay elevated and increase.

And so I think it's going to force people over here. Hey, how do we get food independence? And App Harvest is another smaller-cap name. It's not well-known. What's interesting is headquartered in Kentucky, they build these sort of stand-alone climate-controlled greenhouses that are very good at building kind of just-in-time food, especially in the vegetable space. So you can build it near wherever the food's going to be consumed, either in restaurants or for home uses.

And so I think a lot of people are going to pay more attention to stocks like this, controlled environment agriculture or agri-tech, in the coming months as years of food famine increase. They are going to be able to take their product overseas. You can imagine in places like the Middle East, they're going to want to deploy greenhouses on mass over time, not just with veggies, but other foods, fruits, and so forth as time goes on. So they're going to be an interesting solution to what I think is going to be a major problem in the capital portion.

Same caveat as before, too, for those of you who are watching it, watching a stock go up 20 percent. The market cap is 700 million. It's above the threshold that we feel comfortable telling you about it. But please take all of that into consideration as you look at a dramatic move like that. Eric, I appreciate it so much. We'll see you again soon. Thanks, Scott.

All right, that's Eric Jackson joining us up next. Bill Ackman says he's done with activist short selling. We'll discuss the reasons why, what could be next for the billionaire investor. Overtime's back after this. It was nearly 10 years ago, hard to believe that, right from this very set, that Carl Icahn and Bill Ackman famously argued over Herbalife live on CNBC. The war of words between two hedge fund heavyweights is heating up with Carl Icahn bashing Bill Ackman over his short position in Herbalife.

Ackman does pump and dump. He's got one of the worst reputations on Wall Street. And I'm going to tell you, this Herbalife is a classic example of what he does. And I'm telling you, he's like the crybaby in the schoolyard. Carl Icahn thought, you know what, this guy's roadkill on the hedge fund highway. I'm never going to have to worry about this kid again. He's not going to even have the resources to sue me. This is not an honest guy, and this is not a guy who keeps his word, and this is a guy who takes advantage of little people. But I wouldn't have an investment with

Ackman if you paid me to do it, if Ackman paid me to do it. He's not used to someone standing up to him. I told Carl after the whole thing, he called me up, and he literally said, you know, Bill, we can be friends now. And I simply said to him, I said, look, Carl, you are no friend of mine. And that was it. I never said that I want to be friends with you, Bill. I wouldn't be friends with you. And you said to me, that i want to be friends with with you bill i wouldn't be and i went you said to me you you'd like to be friends so that we could invest together i have no interest do you think i want to invest with you okay let's move on with you almost 10 years can't believe that ackman of course as you know was short the stock

a practice he now says in a new letter to his Pershing Square investors he is quitting for good. Our Leslie Picker here with more along with Ken Squire. He's the founder and president of 13D Monitor, which tracks activist activity. Also, of course, and we're happy to say a CNBC contributor. It's good to have you both here. Leslie, what's this about? What is he exactly saying in this letter? So Ackman's talking about what he describes as Pershing Square 3.0. He gives the kind of the history of the firm. Iteration 1.0 was more of that transactional activism that you saw, the short seller activism, this idea that, you know, he would wage proxy fights. He hasn't actually waged a proxy fight in five years. Then he goes on to describe 2.0, which is more of

that kind of constructivist activism style, maybe getting onto the board and advising them on different strategic changes that could enhance shareholder value. Now he says Pershing Square is in its third iteration, essentially more of a not a passive investor per se, but one that isn't kind of out there noisily making complaints and battling the cages like you saw a decade ago. Yeah, he is still hedging, right? If people use short selling as a hedge against their longs, if you're a long short investor, it's just done. He's expressing it differently these days. Right. That's the distinction. So Herbalife was a directional hedge. It was something where he said, I think that this company is going to say zero or slightly above there.

And therefore, I want to to short this company. And I want to tell everybody why. What he is doing now is he has these kind of asymmetric hedges that have actually been extremely lucrative for him. Over two billion dollars in proceeds from hedges put on around the pandemic, as well as last year. Of course, there was still a pandemic last year, but he put on those hedges for different reasons. So it's been a way for him to essentially be all in, not have any cash on the sidelines, be fully invested, but also have a way to kind of hedge out some of that concentrated long exposure that he's known for, that he has about, you know, say eight to 10 positions at one time. Ken, you know, I saw a stat from another firm, not yours, but nonetheless, it surprised me. And it said there were 126 activist short seller campaigns last year, according to this particular firm, the fewest since the firm began tracking the data in 2013.

I'm wondering why you think that is. Maybe partially it's due to what happened with GameStop, et cetera. But you're the expert here. What's going on? Well, hey, thanks for having me, Scott. And congratulations on the new show. First off, I think activist shorts is somewhat of an oxymoron. Activism is when you're aligned with the shareholders.

There are public shorts and you can get active in these shorts like Bill did at Herbalife. But the reason why I think there's less of it and the reason why Bill never likes doing it is because it's not the asymmetry that investors are looking for. Your upside is capped at 100%. You have an unlimited downside. And it's a lot of work, especially when you get public with it. It's not good for your image. And I think, you know, for those reasons, you're seeing a lot less of it. For Bill also, he likes being in line with

the shareholders. That's why in 18 years, he's only really done two shorts. Now, they've been very compelling and very, very high profile and very memorable. But but it's really only two in 18 years. Is activism, Ken, becoming a bit of a lost art or not? I mean, Icon is still obviously active, as is Nelson Peltz, although he'll tell you he's become more of a constructivist in his own right. But Paul Singer's there and there are others. And I'm not sure, you know, some of the younger generation maybe who's waiting in the wings. Jeff Smith, Value Act still does it. Lauren Taylor Wolf does it from an ESG perspective. It's not only is it not a lost art, it's certainly changed and it's certainly evolving.

But I think we're at a point now where it's going to be almost more relevant than it's ever been with the intersection of activism and ESG and activists who are on boards of companies for the purposes of helping, you know, create value through operational changes and strategic and financial changes are realizing that they're also in a unique position to create improvements in the ESG part. And these are guys, you know, men and women with good moral compasses that are going to get on the boards and are going to look at ESG as well. And I think that's what you see as the future of shareholder activism. I mean, we're reminded of that recently, of course, as you know, yesterday with Icon and Kroger and then McDonald's, too. Ken, it's good to see you. Thanks for coming on Overtime. Leslie,

it's always good to see you as well. We'll see you again soon. Up next, one Wall Street firm is out with a bullish call on Disney. We're going to dig into that pick with the analyst behind it. Up next, a big call on Disney. One top analyst says the company is, quote, hitting it out of the park. She'll join us when Overtime returns. Bank of America out with a bullish call today saying Disney is hitting it out of the park. Let's bring in the analyst behind that call, B of A security senior media and entertainment analyst Jessica Reif-Ehrlich. Welcome. It's nice to see you. Great to see you. Thank you for having me. You know, you do say

hitting it out of the park, and it's notable, too. You reiterate your buy. $191 is the price target. I take a couple of ways. That was the high. So it implies, I mean, it shows you just how far this stock has fallen. Why can it get back to that level? We're at the beginning of a multi-year park resurgence. We've seen this before, whether it was the gas crisis in the 70s, 9-11, recessions. Once the parks recover, there's a five to 10-year growth curve. And we've never seen the parks recover, there's a five to 10 year growth curve. And we've never seen the parks close for this long. So the pent up demand is incredible. Right now we're seeing just domestic attendants. They practically met their prior peak in the first quarter. I just came back from the analyst day.

You could not move. The parks were packed. Our hotels were packed. The airport is packed. And this is with domestic demand. So we have yet to see international attendance come back. And that's 18 to 22 percent of total attendance in a typical year. Cruises are still not at capacity and hotel rooms are still not all open. I mean, it's interesting you don't mention, you know, I'm wondering what part of streaming is part of your thesis, which seems to be the growth, real growth area.

How much does that account for how optimistic you are? I mean, the parks, the great thing about the parks is the leverage. So they will surprise likely on the upside for the next many, many quarters. So that's and that's a big part of the growth. But on Disney+, which of course is the long-term story, there is so much opportunity here. The company reiterated their goal or their confidence in reaching their guidance of 230 to 260 million subs

by fiscal year 2024, regardless of what happens with the IPL in India, the cricket, which is coming up in June. So they'll negotiate that. And we're pretty confident they'll get at least one package. But they just announced today that they're going to do over 40 more countries, which they knew was coming. Their content cadence will basically be where they want to be by second fiscal half of this year. So there's tons of content, TV and movies coming. And then they'll be at their normal pace. And I think really one of the most important things is that they plan on introducing this year an AVOD service, meaning they'll have the subscription service, which is all they've had so far.

But they will introduce a subscription plus advertising tier. So lower price for people who really can't or don't want to pay the full subscription price. So the TAM, the total addressable market, goes up on a global basis. I got you. Big call by one of the best in the business. Jessica, thanks. Thanks so much. All right. That's Jessica Reif Ehrlich. We'll talk to her again soon. Up next, Two Minute Drill. To the results of our Twitter question of the day, which asset class will you be most aggressively invested in this year? The majority of you saying stocks. Fifty four percent. Well, twenty nine crypto. That's an interesting part of our poll answer today. Time for the Two Minute

Drill. Three top stock picks for your portfolio to end your day. Let's bring in Westwood Quality Value Fund co-portfolio manager Lauren Hill. It's nice to see you pick number one, EL Estee Lauder. Tell me why. Yes, Estee Lauder trading at the intersection of quality and value. Stock's down 24% year-to-date. Wonderful reopening play. The masks are coming off. Everyone's starting to wear makeup again and travel retail which is very high margin business is coming back as more people are moving through the airports long term uh really love it because uh the middle class is growing globally led by asia especially china big uh focus market for them and also as women age they spend more on beauty products so women over the age of 60 spending three times more

than those under 25. Okay. How about Eli Callaway Golf, E-L-Y? Yes. I really love Topgolf and also Callaway Golf products right now. There's a record low inventory, record high demand participation, the number one indicator for growth in sales and earnings. Is that a record high demand participation, the number one indicator for growth in sales and earnings is at a record high. That's driven by two factors. So we have a ton of new participants coming into the sport and also retirees. We had three million people pulled forward by COVID retiring. Right. They play golf twice as often as the average golfer. So 450 stores long term really like the opportunity in the business. Ten seconds on one eight hundred flowers and really 10. OK. Rare execution missing. Q4 management learned their lesson back on track.

Baby boomers are really the big opportunity for them. They picked up a ton during covid and they're hanging on to them with high retention. So see tremendous growth potential in the business. Lauren Hill, I appreciate it very much. That does it for us in overtime.