Pershing Turns Up McDonald's Heat

The battle for the future of McDonald's(MCD Quote) heated up Tuesday morning, when a major hedge fund investor said he believes the burger giant's stock could trade anywhere from $10 to $15 higher if the company were to spin off its company-operated restaurants and focus instead on its lucrative franchise and real estate business.

Bill Ackman, managing director of Pershing Square Capital, which has amassed a 4.9% stake in McDonald's, brought his proposal public Tuesday morning at the Value Investing Congress conference in New York City.

Ackman said he first urged McDonald's management in September to spin off its company-operated restaurants (which he criticized as a costly and low-margin business) into a separate IPO and keep the remaining franchise business. Under the proposal, McDonald's would keep a 35% interest in the new IPO, but would generate its remaining income from rental leases and fees from franchisees. ...