Pershing Square Builds Chipotle Stake ~ market folly

Thursday, September 8, 2016

Pershing Square Builds Chipotle Stake

Bill Ackman's activist firm Pershing Square has filed a 13D with the SEC regarding Chipotle (CMG).  They've disclosed a new position in the company and now own 9.9% of CMG with over 2.88 million shares.

We've highlighted recently how Ackman has been selling various stakes and raising cash and now we know where some of that cash was allocated to.

Chipotle has slowly been trying to recover from a series of food poisonings that severely affected the company's results.  As shares have fallen, some value investors have started to poke around and Ackman has joined the cause as an activist voice.  The 13D notes he'll meet with management.

To build the stake, Pershing bought and sold various options and you can view the full list of transactions here.

While some people have given Ackman grief for the saga with Valeant Pharmaceuticals (VRX), the quick service restaurant space is something he absolutely has experience with.  It will be interesting to see how he tries to help them recover from their troubles given he feels the company has an excellent brand.

Per Google Finance, Chipotle is "together with its subsidiaries operates Chipotle Mexican Grill restaurants. The Company's Chipotle Mexican Grill restaurants serve a menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads. The Company operates approximately 1,970 Chipotle restaurants throughout the United States, over 10 in Canada, seven in England, four in France and one in Germany. The Company's restaurants include over 10 ShopHouse Southeast Asian Kitchen restaurants, serving Asian-inspired cuisine. The Company owned and operated approximately three Pizzeria Locale restaurants, a fast casual pizza concept, resulting in a totaling of approximately 2,010 restaurants. The Company sells gift cards which do not have an expiration date.."

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