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Morning Brief: Ackman Wins as Chipotle Shares Surge

The hedge fund activist finally got a boost from one of his long-suffering bets.

  • By Stephen Taub

Bill Ackman benefited from a dose of good news from one of his poor performing activist targets: Shares of Chipotle Mexican Grill jumped 5.6 percent Wednesday to $301.99 after founder Steve Ells resigned as chief executive of the casual dining chain. In December Chipotle agreed to add four board members as part of a compromise settlement with Ackman’s Pershing Square Capital Management. At the end of the third quarter Pershing Square remained Chipotle’s largest shareholder. The stock, however, is still down about 39 percent since mid-May. Ackman’s other major restaurant investment — and his largest long position — has fared very well this year. Shares of Restaurant Brands, which owns Burger King, Tim Hortons and Popeyes, is up 36 percent. On Wednesday, Pershing Square Holdings reported that it is down 4.5 percent for the year through November 21.

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Popular hedge fund stock Micron Technology plunged 8.7 percent to $43.74 on an overall lousy day for tech stocks. Still, the price of the chipmaker’s shares has roughly doubled this year even after Wednesday’s selloff. As previously reported, David Einhorn’s Greenlight Capital highlighted this stock in its third-quarter letter. Micron was also the largest U.S. long position of David Tepper’s Appaloosa Management, which in turn is Micron’s ninth largest shareholder. Nineteen hedge funds counted Micron among their top-10 holdings at the end of September, according to Goldman Sachs Group analysis of 13F filings.

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Shares of hedge fund favorite Autodesk plunged Wednesday nearly 16 percent to close at $109.34 after the 3-D imaging software company announced a restructuring. Autodesk also plans to lay off 1150 people, or about 13 percent of its employees, according to the San Francisco Chronicle. At the end of the third quarter, Autodesk ranked among the top-10 holdings of 16 hedge funds, according to Goldman Sachs. Hedge funds invested in the company include Hoplite Capital Management, Darsana Capital Partners and Melvin Capital Management, according to regulatory filings.

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