Hedge Fund: Pershing Square Capital Sells Starbucks Stake

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Ackman cashes out with a 73% gain in just 19 months.

Pershing Square Capital has exited its stake in Starbucks Corporation (NASDAQ: SBUX). According to reports, Bill Ackman’s hedge fund announced the divestiture during an investor presentation today.

The presentation said that Starbucks is “firing on all cylinders” and that today’s “market now has a much better understanding of Starbucks’ business quality and growth potential.”

Pershing Square Capital earned a 73% return in 19 months with this stock.

Starbucks has stalled out, however, in recent months. It faces increasing competition from Chinese competitors Luckin Coffee (NASDAQ: LK). It also recently closed a large number of stores in China due to the ongoing spread of the coronavirus.

Pershing Square Capital Continues to Outperform

Bill Ackman’s hedge fund saw a net 58.1% return in 2019. That return followed four years of losses. The firm had a costly loss betting against Herbalife Ltd (NYSE: HLF). It also had failed investments in Valeant Pharmaceuticals and Bausch Health Cos. (NYSE: BHC).

Pershing Square Capital has taken two new positions in recent months. It purchased a passive stake in Warren Buffett’s Berkshire Hathaway (NYSE: BRK.B) and Agilent Technologies (NYSE: A).

Pershing’s current portfolio also consists of:

  • Chipotle Mexican Grill (NYSE: CMG);
  • Hilton Worldwide Holdings (NYSE: HLT);
  • Howard Hughes (NYSE: HHC);
  • Fannie Mae (OTC: FNMA);
  • Freddie Mac (OTC: FMCC);
  • Restaurant Brands International (NYSE: QSR), and;
  • Lowe’s (NYSE: LOW).

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