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Ackman Builds on His 2019 Rebound as Chipotle Rallies to Record

The strong returns are a welcome reversal of fortune for Ackman, who had seen high-profile setbacks in recent years.

Ackman Builds on His 2019 Rebound as Chipotle Rallies to Record
Bill Ackman, chief executive officer of Pershing Square Capital Management LP, speaks during the WSJ D.Live global technology conference in Laguna Beach, California, U.S. (Photographer: Patrick T. Fallon/Bloomberg)

(Bloomberg) -- Bill Ackman has made about $730 million betting on burritos.

The value of the billionaire investor’s stake in Chipotle Mexican Grill Inc. has surged as the restaurant chain rose to a record Monday, more than three years after a food-safety crisis tarnished the brand and battered its shares.

Ackman Builds on His 2019 Rebound as Chipotle Rallies to Record

Ackman originally invested roughly $1.2 billion in the company back in 2016. Two years later, with the shares up 17%, he started selling, offloading batches of shares in a series of transactions between August 2018 and last month. Now, with Chipotle grazing a new high, the value of Ackman’s remaining stock in the company has surged to about $1.35 billion.

Ackman’s Pershing Square Capital Management has returned about 48% on its investments this year through July 9, according to the firm’s website. The strong returns are a welcome reversal of fortune for Ackman, whose high-profile setbacks in recent years have included his $4 billion loss on Valeant Pharmaceuticals International Inc. and his losing bet against Herbalife Nutrition Ltd.

Chipotle’s shares gained 1.2% to $759.87 in New York, the highest since the company’s initial public offering in 2006. The customer-illness issues started in 2015, and the shares closed that year at $479.85, beginning the first of three straight annual declines.

Ackman Builds on His 2019 Rebound as Chipotle Rallies to Record

Ackman’s Pershing Square Capital Management declined to comment on the investment.

Activist Ackman announced a stake in the company in September 2016, wagering that Chipotle could rebound. The company later that year added four new board members in a shake-up endorsed by Ackman, then replaced Chief Executive Officer Steve Ells, who founded the chain, with former Taco Bell chief Brian Niccol.

Under Niccol, the burrito chain has made a series of overhauls. It has relocated company headquarters, pushed hard into delivery and rolled out a new loyalty program to attract customers. So far results have been positive with the key indicator of same-store sales rising 9.9% in the latest quarter -- the fifth consecutive period of acceleration.

The shares were up 0.9% at 3:49 p.m. in New York, paring some of the earlier gains. The shares finished 2018 up 49% and have surged about 75% so far this year.

--With assistance from Leslie Patton and Brandon Kochkodin.

To contact the reporters on this story: Scott Deveau in New York at sdeveau2@bloomberg.net;Craig Giammona in New York at cgiammona@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, ;Liana Baker at lbaker75@bloomberg.net, Lisa Wolfson, Michael Hytha

©2019 Bloomberg L.P.