Activist investor Bill Ackman’s hedge fund invests $900 million in Starbucks

Activist investor Bill Ackman is making a big bet on coffee. His hedge fund just invested about $900 million in Starbucks.

He made the announcement during a conference in New York on Tuesday, according to Ackman’s fund, Pershing Square Capital. Pershing acquired 15.2 million shares of the coffee company.

Starbucks (SBUX) investors appreciated the vote of confidence, sending the stock up 2.5% Tuesday.

During his presentation, Ackman outlined why he thinks Starbucks is a good bet. The company still has room to add stores in the United States, he said. And because of its generous wage and benefits plan, it won’t suffer if the minimum wage goes up. He also pointed to the company’s business in China as an engine for growth. Plus, the coffee category is growing overall, he said.

Ackman said he is encouraged by CEO Kevin Johnson’s recent actions, including closing Teavana stores. The investor believes shares of the company could double in value over the next three years.

Pershing holds stakes in other food companies, including Chipotle (CMG) and Restaurant Brands International (QSR), which owns Tim Hortons, Burger King and Popeyes.

Whether Starbucks investors should be glad or nervous about Ackman’s big bet is up for debate. Ackman has enjoyed plenty of success in his career, including betting against mortgage-backed securities ahead of the 2008 financial crisis. But he has become far more notorious for his enormous mistakes.

He famously lost a $1 billion bet against Herbalife (HLF). In 2012, he took a short position, or an investment that makes money when the stock price falls, against the company. The hedge fund manager called the nutritional supplements company a pyramid scheme that he thought would eventually go to zero. But the stock soared. In March of this year, he finally gave up.

His fund also bought troubled Valeant Pharmaceuticals’ stock at $196 a share in 2015 — and sold them for $11. Investors bailed out of Valeant following an accounting scandal and increased regulatory scrutiny after it hiked drug prices. Ackman lost $4 billion for his investors on that bad bet.