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Bill Ackman is making a comeback with his hedge fund up more than 24% this year

Thomas Franck
Recent outperformance has been driven by investments in ADP, Lowe's, Starbucks and Chipotle, according to the activist investor.

Hedge fund manager Bill Ackman is on the comeback trail.

His fund Pershing Square is up 24.7 percent in 2019 through Tuesday, according to the fund's website. The fund has made a number of headlines in the past year for new stakes in Starbucks and Hilton Worldwide Holdings. 

Ackman explained in his most recent shareholder letter that the recent outperformance has been driven by investments in ADP, Lowe's, Starbucks and Chipotle. During the third quarter of 2018, Pershing dissolved its stake in global packaged foods company Mondelez and took a stake in coffee giant Starbucks at an average cost of $51 per share. That means the hedge fund manager is already up about 37 percent on the investment.

The fund also saw success in its bet on burrito restaurant Chipotle, which is up more than 136 percent over the past 12 months at $593.66 per share. Ackman helped Chipotle install Brian Niccol — who arrived with a successful track record at Taco Bell — as the company's CEO early last year and has remained a proponent of innovative menu and delivery options. Pershing Square was the second-largest holder of Chipotle shares according to the most recent government filings. Ackman first bought Chipotle stock in 2016 at an average price of $405 per share.

Pershing made a quick $100 million in profit from a stake in Nike it sold last year.

The good times for Ackman and Pershing Square come after a spell of negative returns for the renowned activist investor. By early 2018, the hedge fund's assets had been more than halved from their peak above $20 billion in 2015. The fund saw its net asset value decline 4 percent in 2017 and slip 0.7 percent in 2018; the S&P 500 gained 19 percent in 2017 and fell more than 6 percent in 2018.

Some of Pershing's challenges over the past few years included a $4 billion loss on its stake in Valeant Pharmaceuticals. Ackman's short of nutritional supplement company Herbalife proved costly not only in money lost, but also in reputation because of the high profile battle over the company with Carl Icahn.