Market Overview

Bill Ackman Reveals A New Long Position In Starbucks

Bill Ackman Reveals A New Long Position In Starbucks

Starbucks Corp. (NASDAQ: SBUX) experienced a surge Tuesday following both the announcement of new care benefits, as well as some big news from a hedge fund billionaire.

What Happened

Pershing Square Capital's Bill Ackman revealed his new long position in Starbucks while speaking at a New York conference.

Pershing has over 15 million shares, amounting to over $900 million. Ackman’s average cost for the stock was $51 per share, which puts him ahead roughly 13 percent following the investment.

Why It’s Important

"If SSS (same store sales) and valuation revert closer to historical average levels," his presentation read, according to CNBC, "we believe that SBUX shares can more than double over the next three years. It's a rare opportunity to own one of the world's best businesses at a discount."

Ackman considers China the company’s single largest growth opportunity, with a repurchase plan that will represent 20 percent of market value.

What's Next

In response to the long position, Starbucks released a statement.

“We view the active, engaged dialogue that we have with shareholders as critical input into our strategic approach and we value constructive feedback on delivering long-term shareholder value. We look forward to maintaining a productive dialogue with Mr. Ackman as we do with all of our shareholders."

Starbucks shares were up 2 percent to $57.67 at time of publication Tuesday.

Related Links:

Stephens' Restaurant Analyst Parses Starbucks' 'Ho-Hum' Quarter

Piper Jaffray Downgrades Starbucks On Comp Performance

Posted-In: Bill Ackman China CNBCNews Hedge Funds Movers Trading Ideas General Best of Benzinga


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