Billionaire Bill Ackman Sold 40% of Pershing Square's Stake in Chipotle Mexican Grill and Is Piling Into a Beloved Consumer Brand That's Risen 67,200% Since Its IPO

Core Insights - Bill Ackman, a prominent activist investor, is reducing his stake in Chipotle Mexican Grill while significantly increasing his investment in Nike, a consumer brand that has seen a substantial decline in stock value [1][5][13]. Chipotle Mexican Grill - Ackman's Pershing Square Capital Management has been a shareholder of Chipotle since Q3 2016, with an estimated cost basis of less than $9 per share [6]. - In the December-ended quarter, Pershing Square sold over 4.1 million shares of Chipotle, totaling approximately 16.6 million shares over the past year, which represents 40% of its stake at the end of 2023 [7]. - The slowing comparable restaurant sales growth of 5.4% in the December quarter and a decline in operating margin to 24.8% indicate potential challenges for Chipotle, leading Ackman to lock in gains [10][11]. - Chipotle's competitive advantages, such as using responsibly raised meats and innovation in service, may not be sufficient to counteract inflationary pressures affecting its operating results [10][12]. Nike - Ackman has rapidly acquired 18,768,946 shares of Nike, valued at over$ 1.4 billion, after previously holding no shares [13]. - Nike's stock has dropped 56% since its peak on November 5, 2021, primarily due to issues stemming from former CEO John Donahoe's management [14]. - The new CEO, Elliott Hill, aims to refocus on core sports products, enhance marketing, and rebuild wholesale partnerships, which could help restore Nike's brand image [16][17]. - If Nike returns to its fiscal 2024 earnings of $3.73 per share, its price-to-earnings ratio could be less than 21, representing a 39% discount compared to its average P/E ratio over the past five years [19].