Hedge Fund Discovers Key Difference Between Americans And Canadians


It's level of interest in Tim Hortons. And Highfields Capital Management has no interest in seeing more of them on its own soil.

Highfields Capital Management LP, a Boston-based hedge fund, wants coffee-and-doughnut chain Tim Hortons Inc. to end its expansion in the U.S. and buy back more shares in an effort to boost profits and its stock price, according to a person familiar with the matter.

Tim Hortons has long dominated the quick-service restaurant industry in Canada, driving the Oakville, Ontario-based company to look south of the border for growth. But it has struggled to generate the same level of profits in the U.S. in the face of intense competition from an array of more established rivals, including McDonald's Corp., Starbucks Corp. and Dunkin Brands Group Inc….

Highfields, which currently owns about 4% of Tim Hortons, believes Tim Hortons is hurting its stock-market performance by using profits from its high-return Canadian business to fund its U.S. growth strategy, even though the returns there aren't nearly as good, this person said. For that reason, Tim Hortons should either abandon its U.S. expansion or focus on markets near the Canadian border, such as Buffalo, to take advantage of the advertising dollars it spends to promote its Canadian operations, the person said.

Tim Hortons Shareholder Pushes for Change [WSJ]
Exclusive: Highfields Capital raises stake in Tim Hortons [Reuters]