Hilton Is Surging After Bill Ackman Announces Stake

Hilton shares have cratered this year, and Bill Ackman sees an opportunity.

Author:: Jacob Sonenshine
Publish date:: Oct 25, 2018 11:40 AM EDT

Hilton shares have cratered this year, and Bill Ackman sees an opportunity.

Shares of Hilton Worldwide Holdings Inc. (HLT) - Get Report jumped more than 5% on Thursday, Oct. 25, after hedge fund investor Bill Ackman disclosed a stake in the company.

Ackman's hedge fund, Pershing Square Capital Management, disclosed a stake of 10.9 million shares in the hotel chain, representing a roughly 3.7% position currently worth roughly $733 million. The stake also brings Hilton shares to about 13% of Pershing's value, indicating Ackman is betting big on the company.

Ackman seems to be optimistic on consumer discretionary stocks, as he announced a 1.4% stake in Starbucks Corp. (SBUX) - Get Report just a few weeks ago.

Hilton shares haven't performed well this year, down more than 15%. Starbucks has risen about 2.1% year to date. Likely to Ackman's chagrin, Dunkin' Brands Group Inc. (DNKN) - Get Report shares have far outpaced Starbucks. Dunkin' is at a more than 11% gain this year.

Hilton shares dropped sharply Wednesday morning despite the company reporting better-than-expected earnings but lower-than-expected revenue. It raised full-year earnings guidance.