Bill Ackman’s Chipotle windfall has already netted him enough to buy 8.3 million carnitas burrito—or 6.6 million with guacamole.
Chipotle Mexican Grill (cmg) surged nearly 6% Wednesday after Ackman disclosed that his hedge fund Pershing Square had taken a 9.9% stake in the Mexican fast-casual restaurant chain. Ackman said he planned to hold discussions with the company about its “future,” suggesting the activist investor might lead a campaign to improve the company.
Shares of the burrito chain, now trading around $437, are down precipitously from their peak in the summer of 2015, after Chipotle was linked to multiple outbreaks of E. coli, scaring diners away en masse. Ackman, however, appears to have bought into the stock at a good time, right around when Chipotle shares were trading at their lowest point this year. The stock hit a bottom of $388.50 per share on August 19.
In fact, since Ackman first started buying the stock about a month ago, he’s already made nearly $80 million, according to Fortune’s back-of-the-envelope calculations. Some of those Chipotle shares he bought just yesterday.
A spokesperson for Ackman and Pershing Square declined to comment.
Indeed, at face value, Ackman’s 2,882,463 Chipotle shares have appreciated more than $66.3 million today alone (each share has gained about $23). But Ackman doesn’t own most of those shares in the form of regular stock, but rather as options to purchase the stock at a later date, known as forward purchase contracts. While these contracts are currently worth more than the market price of Chipotle’s stock, Ackman also paid more for them than he would have if he’d just bought Chipotle’s stock outright.
Here’s the math that got us to our estimate of of Ackman’s Chipotle profits:
-Ackman bought 554,213 shares of Chipotle common stock for $224,491,131 (including commissions). Those shares are now worth $242,191,080, so his profit is $17,699,950.
-The remaining 2,328,250 shares that Ackman owns are actually equity forward contracts, which are each worth, on average, about $444, or more than $1 billion in total. Ackman disclosed that he paid $974,342,953 for them (or $418.49 for each one), so the profit is $59,400,047.
-Finally, Pershing also traded in various other derivatives, for net proceeds of $2,077,875, according to the disclosure.
All told, that adds up to $79,177,872 in profit so far. To put those profits in burrito terms, Fortune based its calculations on the prices at the Chipotle store nearest Ackman’s office in New York.
Of course, the profit are tiny compared to Ackman’s multi-billion dollar losses in Valeant Pharmaceuticals (vrx). Ackman has had a run of bad investment returns. In all, Ackman’s publicly traded vehicle is down a little over 14% this year. The fund lost more than 20% last year.
What’s more, it’s unclear why Ackman chose to purchase most of his Chipotle shares as equity forward contracts, rather than just buy the stock outright. Had he purchased shares instead of contracts when they hit their low on August 19, he would have made about $113 million on that trade alone, and about $133 million total.