Why would a multibillion-dollar hedge fund manager buy fast food? For major profits. “We’ve been a big investor in the space,” Bill Ackman, founder and CEO of Pershing Square said of fast-food chains on Thursday. Ackman’s investment in McDonald’s in 2005 almost doubled by the time he sold it for $56 a share.
"We owned McDonald’s for a long period of time, and have tremendous respect for what they've accomplished," he told CNBC.Pershing Square also invested in Wendy’s in 2005, which Ackman says paid off after ”convinc[ing] them to spin off Tim Horton’sCanadian coffee and donut chain.”
While he does not currently own McDonald's shares, Ackman commends the company for exploiting the value of its real estate and franchise network. “I like a businesses when you charge a royalty on other people’s sales. Their business is collecting 4 percent of the gross revenues of 33,000 boxes around the world, and another 8 or 9 percent in rent,” he said.This means McDonald's rakes in about 13 or 14 percent of stores’ gross revenues.Page 1 of 3 | Next Page