Activist investing billionaire Bill Ackman, the CEO of $11 billion Pershing Square Capital, believes that long-term investors in Chipotle Mexican Grill (CMG) will be “rewarded” as the fast-casual chain moves past its recent food troubles.

“We believe that a good time to buy a great business is when it is in temporary trouble,” Pershing Square said in an investor presentation in London on Monday.

“While Chipotle’s reputation has been bruised, we believe that the business will ultimately recover and become stronger aided by: Improved governance, increased focus on operations, appropriate marketing and technology initiatives, [and] passage of time,” the presentation continued, adding that timing for the recovery can be “difficult” to predict.

In 2015, Chipotle was rocked by norovirus, E.coli and salmonella outbreaks. The stock price plummeted after trading around $750 that August. The company has since made food safety changes.

Pershing Square is the second-largest shareholder of Chipotle with an approximately 10% ownership stake in the company. The fund announced its position on September 6, 2016 and began “constructive dialogue” soon after with management and the board. Pershing Square last owned more than 2.88 million shares, a position valued at more than $1.36 billion.

In the presentation, Pershing Square described Chipotle as “currently one of the most compelling and authentic large-scale food brands in the U.S.”

The fund then went on to compare Chipotle’s noticeably simpler steak to Qdoba (JACK) and Taco Bell (YUM).

Chipotle currently operates 2,200 stores in the U.S. Pershing Square also sees a “significant” growth opportunity for the company, with some of the key drivers being mobile and online ordering, catering which typically means higher margins, store unit growth, and the continued growth of the fast-casual category.

In addition, Chipotle “has a number of other attractive attributes that help mitigate investment risk,” Pershing said.

The fund highlighted the company’s limited global macroeconomic sensitivity and foreign currency exposure, its simple business model, and the company’s unlevered balance sheet with a strong net cash position as attractive attributes.

Pershing also said that Chipotle would be a “big beneficiary” of U.S. corporate tax reform. The company currently pays a rate of nearly 40%.

—
Julia La Roche is a finance reporter at Yahoo Finance.

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