Activist investors trim positions in Tim Hortons' stock


By Euan Rocha

TORONTO, Nov 15 (Reuters) - U.S. hedge funds Scout CapitalManagement and Highfields Capital disclosed in regulatoryfilings that they have trimmed their stakes in Tim Hortons after shares in the Canadian coffee and doughnut chainposted big gains.

The two activist investors had urged Tim Hortons to increasedebt levels to fund a share buyback, as well as address concernsabout its U.S. expansion, and to name directors to the board whohave more financial expertise.

In response, Tim Hortons in August said it was expanding itsbuyback plan by C$900 million ($860.4 million). It also namedtwo new directors: Sherri Brillon, the chief financial officerat Encana Corporation, and Thomas Milroy, group head ofBMO Capital Markets.

Shares in Tim Hortons have surged 36 percent over the last12 months, and 15 percent since April, when Reuters first brokethe news about activist interest in the company.

In a regulatory filing on Friday, Scout Capital disclosed itnow owns 4.4 percent of Tim Hortons' stock, down from about 5.5percent in June.

Highfields, in a filing on Thursday, said it now owns 1.6percent of the company's outstanding shares, down from about 2.6percent in June.

Tim Hortons reported an 8 percent rise in quarterly profitlast week. The company reported that its U.S. same-store salesgrew by 3 percent, while its Canadian same-store sales rose 1.7percent in the third-quarter.

The chain is facing increased competition in Canada fromU.S. competitors such as McDonald's Corp and StarbucksCorp, who have ramped up their offerings and promotionsto attract new customers.

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