Chipotle and Ackman Near Settlement, but Company Continues to Face Big Problems

Shares in beleaguered Tex-Mex restaurant chain Chipotle Mexican Grill (CMG)  rose more than 2% Friday following word from the company that it is close to reaching a settlement with an activist investor.

But an agreement with Bill Ackman won't make this stock any less toxic. Investors should stay away. 

Pershing Square Capital Management, the hedge fund run by Ackman, purchased a 9.9% stake in Chipotle in September. That made the fund the second-largest Chipotle shareholder, after Fidelity Investments.

Ackman is an activist investor famous for pushing drastic changes in the companies he buys, including forcing out board members and selling off parts of businesses. 

Since Ackman's purchase, Chipotle has reportedly hired the services of two high-profile investment banks, Goldman Sachs and Morgan Stanley, as well as law and public relations firms. The company wants to protect its business against potentially disruptive moves by Ackman and Pershing Square.

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