Chipotle Soars After Bill Ackman Reveals 9.9% Stake, Goes Activist

Many thought that having been squeezed between the terrible performance of his Valeant long and his "career" Herbalife short, that Bill Ackman would quietly fade into the sunset, facilitated by the dreadful YTD performance of his hedge fund. No such luck, and as he revealed moments ago in a 13D filing, the Pershing Square founder has just gone activist on Chipotle, revealing a 9.9% stake, and announcing he intends "to engage in discussions with the Issuer and Issuer’s management and board of directors, other stockholders of the Issuer and other interested parties that may relate to the governance and board composition, business, operations, cost structure, management, assets, capitalization, financial condition, strategic plans, and the future of the Issuer."

From the report:

The Pershing Square Funds purchased 554,213 shares of Common Stock for aggregate consideration (including brokerage commissions) of $224,491,131.

 

The Pershing Square Funds entered into over-the-counter forward purchase contracts providing for the purchase of 2,328,250 shares of Common Stock for a net purchase price of $974,342,953 (less rebate amounts for early settlement, if applicable).

The kneejerk response in the heavily shorted stock is, naturally, to soar some 7% in the afterhours session.

 

From the 13-D:

The Issuer is a leading fast casual restaurant company that the Reporting Persons believe has a strong brand, differentiated offering, enormous growth opportunity, and visionary leadership. The Reporting Persons believe that the Issuer’s Common Stock is undervalued and is an attractive investment.

 

The Reporting Persons intend to engage in discussions with the Issuer and Issuer’s management and board of directors, other stockholders of the Issuer and other interested parties that may relate to the governance and board composition, business, operations, cost structure, management, assets, capitalization, financial condition, strategic plans, and the future of the Issuer.

 

The Reporting Persons may also propose or take one or more of the actions described in subsections (a) through (j) of Item 4 of Schedule 13D, including but not limited to, solicitation of proxies, and may discuss such actions with the Issuer and Issuer’s management and the board of directors, other stockholders of the Issuer and other interested parties.

 

The Reporting Persons intend to review their investments in the Issuer on a continuing basis. Depending on various factors and subject to the obligations described herein, including, without limitation, the Issuer’s financial position and strategic direction, actions taken by the board of directors, price levels of shares of Common Stock, other investment opportunities available to the Reporting Persons, concentration of positions in the portfolios managed by the Reporting Persons, tax considerations for investors in the Pershing Square Funds, market conditions and general economic and industry conditions, the Reporting Persons may take such actions with respect to their investments in the Issuer as they deem appropriate, including, without limitation, purchasing additional shares of Common Stock or other financial instruments related to the Issuer or selling some or all of their beneficial or economic holdings, engaging in hedging or similar transactions.