Why Bill Ackman Is Swapping Starbucks Stock For Domino's

Activist investor Bill Ackman announced recent portfolio changes in an interview at the Wall Street Journal's Future of Everything Festival Wednesday.

During the interview, Ackman discussed the progress of his special purpose acquisition company, Pershing Square Tontine Holdings, Ltd PSTH and announced that his fund, Pershing Square Capital Management, sold its stake in Starbucks Corp SBUX and bought Domino's Pizza Inc DPZ.

The fund sold Starbucks because it reached a price that made it difficult to earn the returns that Ackman's fund is targeting moving forward, he said.

"The stock recovered too quickly," he said, adding that he believes investors will still do well investing in Starbucks. 

Domino's dropped dramatically in price for reasons Ackman didn't understand, he said, adding that the fund bought shares in the pizza company when its stock fell to around $330 per share. 

See also: How to Buy Starbucks Stock

Ackman told the Journal that the fund did not buy as much stock as it wanted, but it owns about 6% of the company. 

Ackman said he likes the restaurant industry, adding that the fund has never lost money investing in the industry.

Domino's has the best technology in terms of delivery, he said. The company is extremely well run, he added, saying that it is continually growing and knows how to properly allocate capital. 

Related Link: Domino's Teams With Nuro For Autonomous Pizza Delivery

DPZ Price Action: Domino's was up 1.47% at $428.92 at last check Wednesday.

Photo courtesy of Domino's.