Ackman says he supports ADP but puts management on notice

(This version of the story corrects to clarify quote)

FILE PHOTO: William 'Bill' Ackman, CEO and Portfolio Manager of Pershing Square Capital Management, speaks during the Sohn Investment Conference in New York City, U.S., May 8, 2017. REUTERS/Brendan McDermid

NEW YORK (Reuters) - Billionaire investor William Ackman, who lost a proxy contest at Automatic Data Processing ADP.O last year, said on Tuesday that he wants the human-resources technology company to succeed but said he might be back with a fight if ADP fails to perform.

Ackman, whose hedge fund Pershing Square Holdings last month reported cutting its holding in ADP to a 7.2 percent economic stake, praised the company for planning an analyst day in June and said he and other shareholders are looking forward to hearing how executives navigate a changed economic environment. ADP will benefit from recent tax cuts, and rising interest rates should help lift guidance, Ackman said at 13D Monitor’s 2018 Active-Passive Investor Summit.

“We are rooting for the company,” Ackman said, adding, other major ADP shareholders have told him “If we are disappointed we will say, We look forward to seeing you (Pershing Square) at the next annual meeting.”

Ackman, who runs the $8 billion Pershing Square Capital Management, has had a tense relationship with ADP’s chief executive officer, Carlos Rodriguez, who said that shareholders delivered an “ass-whipping” to the investor when he lost the proxy contest last November.

Since then, Ackman said relations have been more cordial, and he described a four-hour-long dinner he had with Rodriguez.

Ackman also heaped praise on the new CEO of Chipotle Mexican Grill Inc CMG.N, Brian Niccol, who started in March. There too, Ackman said he sees plenty of opportunity, noting the restaurant chain could offer breakfast, dessert, longer hours and drive-through options. Pershing owns 10.36 percent of Chipotle, according to Thomson Reuters data.

In a nod to diversity at boards, a topic that is gaining force in corporate America, Ackman said he may run an all-women slate one day and predicted it would win. At ADP he proposed three directors, including himself and one woman.

Ackman, who closed out the conference, caused some attendees to murmur about his declaration in January that he planned to keep a lower profile as he tries to resurrect his business.

After three years of back-to-back losses, Pershing Square is again in the red in early 2018, but Ackman sounded an optimistic note that a turnaround is possible for him and his portfolio.

“I hope we are on our way back to rebuilding our record,” he said.

Shares of ADP closed up 0.8 percent at $117.89 on Tuesday, and Chipotle closed up 2.5 percent at $334.61.

Reporting by Svea Herbst-Bayliss and Liana B. Baker; Editing by Leslie Adler