Domino’s Pizza Shares Jump After Bill Ackman Takes Stake in Company

Activist billionaire investor Bill Ackman has taken a notable stake in Domino’s pizza, which has helped drive shares 6% higher as Wall Street learned of the move.

Ackman made the remarks on Wednesday that his hedge fund that built a 6% stake in the company after selling its stake in Starbucks.

Ackmnan’s hedge fund Pershing Square sold Starbucks after the coffee chain’s swift rebound from the pandemic. The fund picked up a stake in
Domino’s shares following a pullback.

Pershing Square owned more than $1 billion worth of Starbucks at the end of 2020. After hitting a pandemic low in March 2020, Starbucks’ shares came back rapidly, finishing the year up more than 20%.

“We sold Starbucks. It got to a price that it was hard to earn the excess return we like to earn … The stock just recovered too quickly,” Ackman explained during The Wall Street Journal’s Future of Everything Festival.

Ackman said that for a brief moment, Domino’s shares had “dropped dramatically in price for reasons we didn’t understand and we were able to swap Starbucks for Domino’s Pizza.” The fund started buying at around $330 a share.

“We didn’t get as much as we would like but we own a little under 6%,” Ackman added.

“Domino’s is a pure franchising company and interestingly they were the first to invest in technology and delivery,” he said. “They own their delivery infrastructure and they don’t need to rely on the DoorDashes of the world.”

Ackmnan’s fund’s top holdings at the end of 2020 included Lowe’s, Hilton, Restaurant Brands and Chipotle.

Domino’s Pizza shares jumped on the news while Starbucks shares fell on Wednesday. Shares of Domino’s are up more than 13% in 2021.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.