Long-Term Returns of Bill Ackman’s 5 Activist Targets

In this article, we discuss the long-term returns of Bill Ackman’s 5 activist targets. You can read our detailed analysis of Ackman’s activist targets and their historical performance and go directly to read Long-Term Returns of Bill Ackman’s Activist Targets. 

5. Valeant Pharmaceuticals Intl Inc (NYSE:VRX)

Activist Investment: 2015
Long-Term Returns Since Ackman’s Investment: -84.59%
S&P 500 Gain Since Ackman’s Investment: 14.77%

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) was a small drug maker that invested heavily in research and development for the development of new drugs. Between 2008 and 2015, it changed its focus on R&D and resorted to acquiring companies that already had drugs in the market. It invested almost nothing in its core business, acquiring more than 100 companies.

In 2015, Ackman boosted his stake in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) from a 5% stake to a 9.9% one after the stock had tumbled significantly. The investment came when the company was under immense regulatory scrutiny over its pricing and operating practices.

Initially, Ackman pursued a passive approach, opting not to pressure Valeant Pharmaceuticals Intl Inc (NYSE:VRX) or push for management changes or other strategic options. He would later secure a board seat to replace the chief executive officer and overhaul the board of directors. However, that did little to reinvigorate the company’s prospects as it remained under regulatory probe over its pricing policies and problems at the specialty pharmacy unit Philidor.

By the time Ackman walked away from the trade, he had incurred a loss of $3 billion as the stock had imploded by over 95%. In 2018, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) changed its name to Bausch Health Companies Inc. (NYSE:BHC).

4. Mondelez International, Inc. (NASDAQ:MDLZ) 

Activist Investment: 2015
Long-Term Returns Since Ackman’s Investment: -4.04%
S&P 500 Gain Since Ackman’s Investment: 22.35%

Mondelez International, Inc. (NASDAQ:MDLZ) is a company that manufactures, markets, and sells snack food and beverage products. It provides biscuits and baked snacks, including cookies and crackers.

In 2015, activist investor Ackman confirmed a 7.5% stake worth $5.5 billion stake in the company.

The investment came when Mondelez International, Inc. (NASDAQ:MDLZ) struggled to impress its financial performance, hampered by a $19 billion purchase of Cadbury. It was under immense pressure to consider the potential sale of the business to PepsiCo’s Frito-Lay brand division.

Ackman was also of the idea that Mondelez International, Inc. (NASDAQ:MDLZ) should consider selling itself as one of the ways of unlocking value. He was also in agreement that the company should pursue aggressive cost-cutting measures.

Nevertheless, the activist investor turned his back on the company in 2018, selling all his stakes and insisting on the need to put the money into potentially more lucrative bets such as Starbucks.

3. Chipotle Mexican Grill, Inc. (NYSE:CMG) 

Activist Investment: 2016
Long-Term Returns Since Ackman’s Investment: 81.80%
S&P 500 Gain Since Ackman’s Investment: 42.53%

Along with its subsidiaries, Chipotle Mexican Grill, Inc. (NYSE:CMG) operates Chipotle Mexican Grill restaurants, offering burritos, burrito bowls, quesadillas, tacos, and salads.

Pershing Square took a 9.9% stake in the fast-casual Mexican food chain in 2016, insisting that its shares were undervalued.

At one point, Chipotle Mexican Grill, Inc. (NYSE:CMG) accounted for some of the biggest gains of Pershing Square Capital management gains. Ackman sold his stakes in the company in 2020 as COVID-19 was starting, insisting he did so to manage his portfolio.

2. Automatic Data Processing, Inc. (NASDAQ:ADP)

Activist Investment: 2017
Long-Term Returns Since Ackman’s Investment: 23.94%
S&P 500 Gain Since Ackman’s Investment: 14.88%

Automatic Data Processing, Inc. (NASDAQ:ADP) offers cloud-based human capital management solutions on a global scale. Its Employer Services segment offers strategic cloud-based platforms and human resource outsourcing.

Activist investor Ackman started building a position in the company in 2017  and started a proxy fight for board seats.

The hedge fund manager wanted Automatic Data Processing, Inc. (NASDAQ:ADP) to cut its bureaucracy, consolidate real estate holdings, enhance technology use, and boost earnings. He also sought three seats on the board. His activism yielded some fruits as the stock price appreciated a year later, resulting in the investor trimming some of his stakes from 8.3% to 7.2%.

1. Restaurant Brands International Inc. (NYSE:QSR)

Activist Investment: 2020
Long-Term Returns Since Ackman’s Investment: 40.39%
S&P 500 Gain Since Ackman’s Investment: 58.12%

Restaurant Brands International Inc. (NYSE:QSR) is a quick-service restaurant company operating through four segments: Tim Horton’s (TH), Burger King (BK), Popeye’s Louisiana Kitchen (PLK), and Firehouse Subs (FHS). Bill Ackman first took a position in the company in 2012.

However, he boosted his stakes at the height of the pandemic in 2020, buoyed by Restaurant Brands International Inc. (NYSE:QSR)’s predictable cash flows, durable growth, and high-quality business. Ramping stakes to 9.6% came with the confirmation that the stock was highly undervalued and an attractive investment.

“We bought a lot more stock in the company because we’re big believers in the company and its management,” said Pershing Square spokesperson Francis McGill in an email to BNN Bloomberg.

With the regulatory filling, Ackman said they intended to hold discussions with the management board and shareholders on various topics, including strategic options and governance.

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