Lost McDonald's Profit Has Ackman Flipping Whoppers

NEW YORK (TheStreet) -- "Is McDonald's an enormously bloated company?"

Activist investor William Ackman of Pershing Square Capital Management said "yes" to the above rhetorical question after announcing what amounts to a 10% stake in Burger King. In the deal that has primed the "king of burgers" for a stock market return by mid-summer, Ackman may be betting that the Golden Arches are vulnerable.

The hedge fund manager left a lot out of his McDonald's analysis, though.

With Super Size off the menu, is McDonalds still bloated?

Beneath the Burger King headline is a hedge fund manager who knows the McDonald's business well. In fact, Ackman may be looking to redeem value meal-related investment gains that he left on the table when he failed to fully capitalize on a doubling of profits at the world's leading restaurant. Ackman sold most of a near $1 billion McDonalds investment in 2007 after the company's stock nearly doubled over a two-year span on dividend increases and the acceleration of company-owned store sales.

Ackman, who invests in a style that is a hybrid of Warren Buffett's focus on value and Carl Icahn's corporate activism, first tangled with McDonalds by taking a large stake and calling for management to spin off its company-owned stores in 2005.

As Ackman and other Burger King investors, including majority stake owner 3G Capital look to flip the Whopper-creator for a fast food profit with their share stakes in the company's imminent IPO, McDonalds shareholders aren't likely to look on with much envy. Ackman, on the other hand, may try to instill some of McDonald's recent successful ways at Burger King.

For all of Ackman's negativity on McDonald's bloated size in a conference call announcing the Burger King investment -- he did praise McDonalds as "one of the greatest stories of all time."