Business Starbucks’ Stock Rises as Much as 5% after Bill Ackman Announces $900 Million Stake Published 2 months ago on October 9, 2018 By Frank Couper Share Tweet Starbucks stock rose as much as 5% Tuesday after Pershing Square Capital Management, a hedge fund led by activist investor Bill Ackman, disclosed a stake in the coffeeshop chain. The investment—which Ackman announced during a presentation at a New York investment conference—involves a stake worth $900 million. Ackman’s presentation said that Starbucks’ return including dividends is flat over three years, but that its forward price-to-earnings ratio of 22 is at a “substantial discount” to its historical average. Ackman also singled out Starbucks’ expansion into China as a cause to be bullish on future growth. “China will become an increasingly greater percentage of the total company over time,” he said. “We believe Starbucks’ recent challenges are fixable with appropriate management execution.” Ackman’s Pershing Square fund has faced a tough 2018. After posting three straight years in the red, Pershing conceding defeat in a prolonged and bruising battle to short the stock of Herbalife and laid off workers as the fund was reportedly “losing investors at a rapid pace.” Pershing saw some good news with its investment in another restaurant chain, Chipotle’s, which is up 53% so far this year. Starbucks’ stock peaked at $64.68 a share in April 2018, capping an 88% rise in the previous three years. Since that peak, however, the stock has lost 11% of its value. The news of Ackman’s stake in the company caused its shares to rise as much as 5% briefly before closing the day up 2%. Last month, Starbucks CEO Kevin Johnson announced an corporate reorganization that would involve layoffs of top-level managers and other staff. The shakeup is meant to revive sales as the company faces competition from new regional chains and as demand for its signature Frappuccino iced-coffee drinks is declining. “We must increase the velocity of innovation that is relevant to our customers,” Johnson said in a memo to employees. “To accomplish this, we are going to make some significant changes to how we work as leaders in all areas of the company. Credit: Fortune Share this:Click to share on WhatsApp (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Google+ (Opens in new window)Click to share on Telegram (Opens in new window)Click to share on Reddit (Opens in new window)Click to share on Skype (Opens in new window) Related Related Topics:BriefingFinanceHedge FundsPershing Squarerestaurant tsRetailStarbucks Up Next Microsoft restarts Windows 10 October 2018 Update, blaming data loss on misdirected folders Don't Miss UPS Drivers Voted Down Their Union Contract, But The Teamsters Are Ratifying It Anyway Continue Reading You may like Dear Santa, Can You Save Me From Holiday Travel This Year? 65,000 Toyota, Lexus Vehicles Recalled a Second Time to Avoid Possible Takata Airbag Explosions Zola Will Open Its First Brick-and-Mortar Store in New York City Follow Us On Flipboard Magazine. Latest U.S. Politics23 mins ago Meghan Markle vowed to live ‘less stifled’ life before dating Prince Harry Not long before she met Prince Harry, Meghan Markle vowed to live a “life less stifled” and to “take a... Sports33 mins ago Former Juve sporting director Marotta takes over at Inter Milan Giuseppe Marotta arrives to attend the draw for UEFA Champions League at the Grimaldi Forum in Monaco. Giuseppe Marotta has... World35 mins ago Constantinople was unwise to antagonize Moscow, leading Orthodox theologian says The Patriarch of Constantinople was wrong to declare Ukraine no longer subject to the Russian Orthodox Church as the conflict... Business52 mins ago Data Sheet—These Bleak Times for Global Tech Companies Jobs for everyone. After a grueling public process involving bids from over 200 cities…oh, wait, no. Apple skipped all that... World1 hour ago Ian Naude: Cheshire PC jailed for raping 13-year-old girl Image copyright Cheshire Police Image caption Ian Naude was being investigated for sex offences when he became a student officer... Most Read Tech1 week ago YouTube top earners: The seven-year-old making $22m Sports7 days ago Maurizio Sarri is steering Chelsea away from top four for second year running unless these changes are made, says Adrian Durham Sports7 days ago Who are the two best central defenders in the world?