Activist investor Bill Ackman buys 10 pct of Chipotle
NEW YORK (AP) - Chipotle shares, under siege after a series of food scares erupted just over a year ago, surged before the opening bell after activist investor Bill Ackman revealed that he's become the taco chain's second largest investor.
Ackman's Pershing Square Capital Management LP has amassed a 9.9 percent stake in Chipotle Mexican Grill Inc., according to a filing with the Securities and Exchange Commission.
Shares jumped about 6 percent in premarket trading Wednesday.
After taking a major stake, Ackman has in the past shaken up the leadership of ailing companies, and that is what Chipotle has become since the first outbreak of E. coli in July last year.
Shares that hit an all-time high close to $760 around that time, have almost been cut in half.
Chipotle did not immediately respond to a request for comment early Wednesday.
But the company has been trying to win back customers after restaurants in multiple states were hit with norovirus, salmonella and E. coli cases, sickening hundreds and dashing its reputation as a place to eat fresh.
It has made changes in the preparation of food that, because it is unprocessed, may have made it more susceptible to the impurities that have a lesser chance of surviving in processed foods.
Chipotle, based in Denver, distributed millions of coupons for free food, and last month gave away free kid's meals on Sunday.
If the arrival of Ackman changes Chipotle's trajectory, it could mark the end of a bad spell for both.
Ackman's Pershing Square became a huge backer Valeant Pharmaceuticals, a drug company whose shares have plunged almost 90 percent over the past year under multiple federal and state investigations.
And Ackman's long and very public campaign against Herbalife, a company that he has called a pyramid scheme, has hammered investors in his hedge fund.
Shares of Herbalife are up 17 percent this year, and they're up 42 percent since Ackman unleashed a withering attack and announced a short position against the company in late 2012.