Ackman's Pershing Square Capital Cuts Stake In Chipotle

Hedge fund investor Bill Ackman’s Pershing Square Capital has reduced its stake in fast casual chain Chipotle Mexican Grill, Inc. (CMG). Pershing sold 823,357 shares of the company worth $401 million on Thursday, according to a filing. In Sep. 2016, Ackman had purchased 2.9 million Chipotle shares, or about 10% of the company, at an average cost of $405. Post Thursday, Pershing's stake accounted for 7.4%, or 2.06 million shares. As of this writing, the company was trading at $475.6. They peaked at $525.89 in the middle of August this year. (See also: Ackman Continues To Believe In Chipotle). 

The popular Mexican eatery’s shares had been on a bull run, reaching a high of $723 in July 2015, before a crash due to a series of news reports towards the end of that year documented virus outbreaks among customers. After acquiring stake in the company, Ackman changed its board and pressed for a new CEO.

"An Eminently Fixable Company" 

During a 2017 television appearance, Ackman told interviewers that the company’s issues were all addressable through better operations and oversight. “This is an eminently fixable company…this is still a great concept,” he said, providing the examples of McDonald’s Corp. (MCD) and Burger King – restaurant chains that have fallen in and out of favor with customers. He also said the chain could innovate by adding breakfast and dessert options, introducing mobile apps, and having drive-through windows. 

For its part, Chipotle brought in Brian Niccol, former CEO of Taco Bell, to aid its turnaround operations. The chain reported a boost in its quarterly earnings in March this year on the back of higher prices and fewer customers. Its shares surged by over 6 percent after a better-than-expected earnings report in July. The company’s higher revenue was due to more spending per customer and the addition of new locations.