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Ackman Conference Call Updates Several Key Positions, Claims Herbalife (HLF) Endgame is Near

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Pershing Square Capital Management is a New York-based hedge fund managed by billionaire investor Bill Ackman. In its third-quarter conference call, Pershing said that 2016 has been a bad year for the fund, mainly due to the losses registered by Valeant. The call said that Bill Ackman was “not happy” with Trump and Clinton running for the Presidency, and that he had urged Michael Bloomberg to run. The call also talked about Pershing’s positions in Chipotle Mexican Grill, Inc. (NYSE:CMG), Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Herbalife Ltd. (NYSE:HLF), Zoetis Inc (NYSE:ZTS), and Restaurant Brands International Inc (NYSE:QSR). We’ll talk a look at his comments on these companies in this article.

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Chipotle Will Recover from Crisis

Pershing Square thinks that even though food safety issues dented the reputation of Chipotle Mexican Grill, Inc. (NYSE:CMG), the company will recover from the crisis. The fund said Chipotle has successfully implemented food safety controls, though its sales still lag. The fund thinks the Mexican grill has a “great” culture, brand and economic model. Pershing added that Chipotle “disrupted” the food industry in the US, and is still one of the best large-scale food brands in the country. However, the fund warned that Chipotle’s recovery will not be smooth or predictable. Ackman’s firm said that it has noted a recovery of sales based on its research of about 5,000 Chipotle restaurants. Pershing said it has a “constructive relationship” with the company’s management, and that its activist position should not be taken as a hostile engagement. Pershing Square recently surprised the Street by taking a 2.88 million-share stake in Chipotle Mexican Grill, Inc. (NYSE:CMG). The aggregate value of the stake stood at about $1.2 billion when first reported and accounted for 9.9% of the company’s total float. It was reported in the media that Chipotle turned to experts, including those from Goldman Sachs and Morgan Stanley, to fend off any hostile moves from Ackman’s fund.

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Valeant in Shambles

Pershing’s third quarter conference call also talked about Valeant Pharmaceuticals Intl Inc (NYSE:VRX), whose stock has lost over 82% so far this year. Pershing thinks the stock tanked mainly due to the criminal prosecution that was opened against it regarding its alleged connivance with Philidor Rx Services to increase drug sales. Pershing said Valeant is “trying” to be transparent. The fund thinks Valeant’s revenue is declining due to tough competition and expenses. Last week Valeant reported third-quarter earnings of a loss of $1.22 billion, or $3.49 per share, while revenue for the period declined by 11% year-over-year to $2.48 billion, missing the consensus estimate of $2.52 billion. Bill Ackman has a 4% position in Valeant.

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On the next page, we will take a look at Pershing Square’s comments on three other stocks.

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