Chipotle Shares Surge 5% on News of Bill Ackman Stake

Embattled burrito chain Chipotle Mexican Grill, Inc. (NYSE:CMG) saw its shares spike in early trading today, after news of a big activist investment hit the wires.

Unveiled via regulatory filings, Pershing Square head honcho Bill Ackman took a recent 9.9% stake in CMG. The activist investor noted he feels the company is undervalued, and he’ll soon be speaking to management about how they can turn their fortunes around.

CMG shares had been hammered over the past year, plunging more than 42% amid food safety issues that have turned many diners off to their restaurants. A rash of e coli outbreaks linked to tainted food landed 21 patrons in the hospital last year, and the company has struggled ever since to restore its reputation.

Chipotle said it welcomes Pershing’s investment, and is looking forward to working with Ackman to boost shareholder value.

The move marks the first big investment by Ackman in quite some time. From Reuters:

Chipotle marks the first addition to Pershing Square Capital Management’s highly concentrated portfolio in nearly a year and at a time the firm is still deep in the red after years of winning performance. A spokesman for Ackman declined to comment beyond the firm’s filing.

The investment in Chipotle puts the company squarely into the path of one of the industry’s most powerful investors who has often handpicked chief executive officers and joined corporate boards to try and guide turnarounds.

Ackman is expected to shake up CMG’s board of directors and pressure the company to boost buybacks, for starters.

CMG-2016-09-07

Chipotle shares rose $21.49 (+5.19%) to $435.56 in premarket trading this morning. Prior to today’s spike, CMG shares had fallen 13.71% year-to-date.

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