Peak Bill Ackman Hate Valeant & Chipotle Mexican Grill
With Ackman and his activist hedge fund Pershing Square Capital’s newest target, he’s been met with hate and skepticism that we haven’t seen since Corvex Management forced ConAgra Foods to buyout Ralcorp – where ConAgra ended up spinning off the money-losing Ralcorp a few years later.
Chipotle (NYSE: CMG), after being rocked by a summer of health scandals, attracted Ackman as a value play. Ackman now owns 9.9% and is the fast-casual chain’s second largest shareholder. Ackman will be looking for a board seat and likely push for cost cuts and some strategic overhauls like franchising and non-core brand refocusing.
However, with the Valeant (NYSE: VRX) fallout, sell-siders aren’t interested in giving Ackman any slack at all. Morgan Stanely says there’s no quick fix for Chipotle. Bloomberg says Chipotle isn’t a good fit for the Ackman playbook, noting that Ackman is simply trying to rescue it from short sellers. Ackman tried to “rescue” JCPenney and Target, only to fail hard. Others have said that Ackman doesn’t know what he’s dong at Chipotle, and the answer isn’t to simply give away more food.
The biggest hit piece:
But I wouldn’t expect Ackman to take the Jeff Smith and Starboard Value approach, where Smith waited tables at Olive Garden to gear up for his Darden Restaurants battle.