Tuesday, September 6, 2016

New stake in Chipotle of almost 10 percent

Pershing Square Holdings Ltd., the hedge fund run by activist investor Bill Ackman, acquired a 9.9 percent stake in Chipotle Mexican Grill Inc. and will seek talks with the beleaguered restaurant chain.

Pershing said it believes that Chipotle shares are undervalued and plans to discuss ways to improve the company’s operations, cost structure, management and strategy, according to a filing Tuesday. A stake of nearly 10 percent would make Pershing Square the second-largest investor in Chipotle, according to data compiled by Bloomberg.

The announcement sent the shares up as much as 8.7 percent to $450 in late trading. The stock had been down 14 percent this year through Tuesday’s close, hurt by the fallout from an E. coli outbreak last year. Based on the latest closing price, Pershing Square’s stake of 2.9 million shares would be valued at about $1.2 billion.