Ackman raises stake in Tim Hortons' 'undervalued' parent

Bill Ackman’s Pershing Square Capital Management has raised its stake in the parent company of Tim Hortons.

While both Pershing and Restaurant Brands International Inc. (RBI) are expressing admiration for one another, a prominent Bay Street lawyer is questioning the hedge fund manager’s approach.

In a filing late Monday afternoon, Ackman and Pershing Square disclosed they now hold a combined 9.6-per-cent stake in RBI, and stated they view the company's shares as being "undervalued" and "an attractive investment."

"We bought a lot more stock in the company because we’re big believers in the company and its management," said Pershing Square spokesperson Francis McGill in an email to BNN Bloomberg.

In the filing, Pershing added that it planned to hold discussions with RBI's management, board of directors and other shareholders on a range of topics that could include strategic plans and its governance.

“The filings and language used by Mr. Ackman against Restaurant Brands are generally designed to capture the attention of a company’s leadership and shareholders. In my view, this is more sabre rattling than a serious activist play with consequence and Mr. Ackman may have miscalculated,” said Walied Soliman, the Canadian chair of Norton Rose Fulbright, and an expert in special situations including shareholder activism, in an email to BNN Bloomberg.

“Restaurant Brands is a sophisticated, shareholder-focused company with a seasoned board and leadership team. I don’t believe that the tactics employed by Mr. Ackman will faze RBI,” he added.​

RBI’s shares have dropped 23 per cent year-to-date, as of Monday’s closing bells.

"Pershing Square has been a shareholder in the company since 2012 and we've always valued their confidence in the vision of the company," said RBI chief corporate officer Duncan Fulton in a phone conversation with BNN Bloomberg.

Editor's note: An earlier version of this story mischaracterized Pershing Square's relationship with Restaurant Brands International. BNN Bloomberg regrets the error.