Billionaire hedge-fund manager Bill Ackman revealed his "transformation plan" for ADP on Thursday to more than double the company's stock price in an epic 167 slide presentation.
ADP's profit "margins are vastly below where they should be," Ackman said on a conference call, walking listeners through Pershing Square's analysis and research.
"ADP's historical success has made it a lethargic and inefficient sleeping giant," he wrote in the presentation.
The hedge-fund manager shared the five key points of his proposal later in the slide show:
1) "Fix corporate structure, Business Unit silos, matrix structure, corporate bloat and inefficiency (bureaucracy, spans-and-layers)."
2) "Accelerate investments in necessary product and back-end improvements."
3) "Accelerate product migrations, sunset back-end systems, and cut associated legacy spend, with some reinvestment in product and other back-end improvements or other growth initiatives (i.e., Big Data)."
4) "Reduce excess support personnel; focus on value-added services."
5) "Increase sales force productivity with better product offering."
Ackman said he believes if ADP executes the plan it will lead to a "significant increase" in sales growth and profit margins for the payroll processor.
Ackman's Pershing Square firm said if ADP is managed properly, then its earnings per share can rise to $8.70 by fiscal 2022 and its share price "can increase to $221 - $255 per share" in less than four years.
ADP closed at $111.10 on Wednesday.
The hedge-fund manager has become embroiled in a public battle with ADP management.
Pershing Square recently took an 8 percent stake in ADP. Ackman told CNBC on Aug. 4 he is seeking big changes at the payroll processor. In a counterpunch, ADP CEO Carlos Rodriguez told CNBC's David Faber last week that Ackman "doesn't know what he's talking about."
In a statement on Aug. 4, ADP compared its six-year stock performance under Rodriguez to Pershing Square's hedge-fund returns from 2012 to 2016.
"Since Carlos Rodriguez became CEO nearly six years ago, ADP's total shareholder return of 202% is well in excess of the S&P 500 TSR of 128% - and is many multiples of Pershing's TSR of 29%," the company said.
The hedge fund has nominated three directors to ADP's board, including Ackman, who revealed Wednesday he raised an additional $500 million in a co-investment vehicle for the firm's ADP investment.
His hedge fund has stumbled in recent years with high-profile losing bets on and .
Pershing Square Holdings is underperforming the market this year. The fund is down 2.2 percent year to date, according to its website. By contrast, the S&P 500 has a 10.6 percent return through Aug. 8.
ADP released the following statement on Pershing Square's presentation:
"ADP is committed to engaging constructively with shareholders on important issues facing the company. However, we strongly disagree with many of the assertions made by Mr. Ackman in today's presentation, which betrays a fundamental lack of understanding of the current state of ADP's business and strategy. He presented nothing that has not previously been analyzed by the Board and management."