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Purchase of Chipotle stake raises question about direction

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Activist investor Bill Ackman said he intends to speak with executives and directors of Chipotle Mexican Grill following the purchase through his Pershing Square hedge fund of a 9.9% stake in the struggling fast-casual chain.

The investment sets the scene for Ackman to weigh in on Chipotle’s strategic direction. He has vigorously pursued a redirection of other chains in which he has invested, from Wendy’s to McDonald’s.

Some financial analysts are already speculating that Ackman will demand such changes as the spinoff of Chipotle’s secondary businesses, which include ShopHouse Southeast Asian Kitchen and Pizzeria Locale.

Ackman indicated in a securities filing that he regards shares of Chipotle as undervalued, a result of a sales free fall that was triggered by a series of food contamination incidents in late 2015.

In his filing, Ackman noted the additional possibility of meeting with fellow shareholders about Chipotle’s business fundamentals.

Wall Street responded positively to news of Ackman’s involvement, bidding up the price of Chipotle shares by about five points.

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