Bill Ackman makes US$900M bet on Starbucks
Bill Ackman said he has taken a new position in Starbucks Corp. (SBUX.O) at a conference in New York, according to a person in attendance.
The activist investor has taken a stake in the retailer worth about US$900 million, said the person, who asked to not be identified because the matter isn’t public.
Starbucks’s shares, which rose as much as 5.6 per cent, were up more than 3 per cent to US$58.31 at 1:33 p.m. in New York trading Tuesday, giving the Seattle-based company a market value of about US$78.7 billion.
"We view the active, engaged dialogue that we have with shareholders as critical input into our strategic approach and we value constructive feedback on delivering long-term shareholder value," a spokesperson for Starbucks said in a statement. "We look forward to maintaining a productive dialogue with Mr. Ackman as we do with all of our shareholders."
Ackman said in August his hedge fund, Pershing Square Capital Management, had built up a new position valued at about US$800 million in a company he didn’t identify.
This year, Ackman has taken new positions in industrial manufacturer United Technologies Corp., where he is advocating for a breakup of the company, and retailer Lowe’s Cos., where he said he was supportive of Chief Executive Officer Marvin Ellison’s efforts to improve the company’s performance.
He also sold a stake in Nike Inc. this year at a profit of about US$100 million in a just few months. In August, Ackman sold down his stake in Chipotle Mexican Grill Inc. as part of a portfolio re-balancing. He sold about $401 million worth of his stock in the burrito chain, reducing his position to 7.4 per cent from 10.4 per cent previously, according to a filing.
Ackman pledged in March to end three years of underperformance at Pershing Square, calling the its most recent returns at the time “particularly unsatisfactory.”
Last week, Pershing Square reported a net return of 15.8 per cent on its investments year to date through the end of September compared to gains of about 8 per cent for the S&P 500 during the same period. The firm’s assets under management have fallen about 10 per cent this year to about US$8.4 billion, though that total is up from about US$8.3 billion at the end of August.
Pershing square had a net loss of 4 per cent in 2017, following a decline of 13.5 per cent in 2016.