Chipotle Feud With Pershing the Latest Sign of Company's Continued Struggles

On Monday, Chipotle Mexican Grill ( CMG)  renewed its annual Halloween promotion: Come into any location dressed in costume and you can purchase an entrĂ©e for only $3. But the beleaguered burrito chain itself is receiving more tricks than treats.

On Monday, the company's stock plunged by nearly 2.5% as investors continued to show the same aversion to the stock as they have since several hundred people got sick from food-borne bacteria at different locations last year.

Chipotle optimists have good reason to be scared. Last week, several major media outlets reported that the troubled fast-casual chain is spending a lot of money to defend itself against activist investor William Ackman.

In September, Ackman, through his hedge fund, Pershing Square Capital Management, purchased 2.9 million shares of Chipotle, or about $1.2 billion worth. That 9.9% stake makes Pershing Square the company's second-largest shareholder, after Fidelity Investments.

Ackman's purchase isn't usually a signal that he feels good about where A company is headed. It generally means the opposite. Rather than waiting for his shares to appreciate, Ackman is an activist investor famous -- or infamous -- for pushing for drastic change in the companies he buys. A lot of times, that means either forcing out board members or selling off chunks of businesses.

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