Ackman takes stake in Domino's

Julie Hyman and Brian Sozzi talk about how activist investor Bill Ackman has acquired a stake in Domino's Pizza after selling off his shares in Starbucks. Brian Sozzi elaborates on the opportunities Bill Ackman can bring to Domino's Pizza

Video Transcript

[MUSIC PLAYING]

JULIE HYMAN: Well, we learned just a few moments ago that Domino's Pizza is getting a new activist investor. It's Bill Ackman. He is buying a stake in the company. I think we don't know exactly what the stake is at this point, but apparently, he started buying Domino's at $330 a share. And he's saying he admired the company for years, but it was never cheap enough.

So, I guess it is now cheap enough for him. Apparently, he sold some Starbucks shares in order to fund that. So, you know, I know this is a company that you follow closely, Brian. When you look at a situation like this, what perhaps-- where do you think Ackman could see some opportunities for improvement at a Domino's?

BRIAN SOZZI: Well, for the most part, it's interesting. If he was buying in around $330, Domino's stock, I mean, in late February 2021, the stock was $372 or so. I mean, for the better part of a year, I mean, the stock has oddly gone nowhere, despite the company putting up double digits-- double digit same store sales gains as people order pizza from their homes, and Domino's is the king in that.

But I think they have lost a little bit of the narrative in the fast food tree to Papa John's. Papa John's just reported an absolutely absurdly strong blowout quarter last week, really strong double digit gains on the back of Epic Stuffed Crust Pizza. And if there is a knock on Domino's, they remain true to their roots of just doing the same thing, and doing it consistently, and putting up big gains. So, they're not going to go out there, per se, and innovate to the extent that a Papa John's is, and to the extent a Pizza Hut is.

But I think part of the reason why the stock has underperformed of late is because the fact that they are not out there pushing the envelope on menu innovation. And certainly, they have acknowledged that they are feeling the heat from those third-party delivery services out there, that they have not hit in that. And of course, you have the minimum wage debate roiling the broader restaurant industry.

JULIE HYMAN: Yeah, so, a lot perhaps for Ackman to work on. We'll see how that works out, in this case, as the shares go higher.