Bill Ackman’s Stock Portfolio: Top 9 Stocks to Buy

3. Chipotle Mexican Grill, Inc. (NYSE:CMG)

Number of Hedge Fund Holders as of Q3: 69

Pershing Square’s Equity Stake: $1.66 Billion

Chipotle Mexican Grill, Inc. (NYSE:CMG) is one of the two investments that Bill Ackman has in the restaurant sector. Ackman has held stakes in the company since 2016 and currently holds roughly 28.82 million shares that make up 12.85% of the entire portfolio.

As the name suggests, the company is an American multinational chain of fast-casual restaurants that specialize in Mexican cuisine, especially bowls, tacos, and burritos made to order in front of the customer. Chipotle Mexican Grill, Inc. (NYSE:CMG) is popular with the young and old alike as it responds well to local tastes and popular culture. Recently, it announced that it would give away 50,000 free entrees during the Super Bowl and instantly became a fan favorite with football enthusiasts.

Restaurants across the United States have been struggling with revenue growth due to rising menu prices in the past year. Consequently, Chipotle Mexican Grill, Inc. (NYSE:CMG) missed market expectations for same-store sales growth in Q3 but managed to maintain its growth target for annual comparable restaurant sales. Consequently, it missed the consensus estimates by 18% and reported revenue of $2.79 billion instead of the expected $2.82 billion in the third quarter of 2024. However, it managed to beat the estimated EPS of $0.25 by 6.25 percentage points and reported earnings of $0.27.

Months after the unexpected exit of former CEO Brian Niccol from Chipotle Mexican Grill, Inc. (NYSE:CMG) to take the top job in Starbucks in August, the interim CEO Scott Boatwright was confirmed as the permanent CEO in early November. Boatwright has been brought in at a challenging time when restaurants across the country struggle with falling consumer demand due to higher menu prices.

ClearBridge Growth Strategy stated the following regarding Chipotle Mexican Grill, Inc. (NYSE:CMG) in its Q4 2024 investor letter:

“We also initiated a position in fast casual restaurant chain Chipotle Mexican Grill, Inc. (NYSE:CMG). The recent pullback in shares related to a moderation in industry-wide restaurant sales and CEO Brian Niccol’s August departure created an attractive entry point into a company with industry-leading unit economics in a still underpenetrated market. Chipotle plans to double its store footprint over time while executing initiatives to increase volume growth through technology enhancements, reduced mobile order friction and higher production during peak hours. Better throughput, technological integration and improved mix should help to drive continued margin expansion. Chipotle further diversifies the portfolio, adding to consumer discretionary where we have historically had less exposure.”