July 18, 2013
Chipotle Mexican Grill, Inc. (NYSE:CMG) announced second-quarter earnings that impressed Wall Street, with 5.5% same-store sales along with confirmation that the company’s second concept, ShopHouse Southeast Asian Kitchen, was in fact gaining traction and a part of the company’s long-term growth strategy. Shares broke back above $400 and today are closing back in on $420. As it stands, Chipotle is a big winner for us in the Everlasting Portfolio, having gained more than 55% and throttling the market in the process. Since Oct. 2, 2012, when Einhorn’s short thesis came out, Chipotle’s stock is up approximately 37%.
Nobody’s right all of the time, including us
Chipotle the business is doing very well today, and Foolish investors should be happy. I’m not here to say that this is case-closed and that Chipotle’s stock price will never come back down. However, there are some timeless lessons here in regard to Foolish investing and why it works. We Fools see Chipotle as a much longer-term story than many others do. This mind-set can and does give us a great advantage; time is our friend, and we’re focused on the business, not the day-to-day gyrations of the stock price. Furthermore, we also know that Chipotle has an excellent management team in place, with a founder, Steve Ells, who appears to be married to the long-term success of this business.
Investors like Einhorn, Ackman, Icahn, and Soros have a lot of money to throw around thanks to their success, and they are quite plainly very smart investors. But everyday investors like us should be extremely cautious listening to them and furthermore even considering acting on their moves. They are playing a different game; a faster game in which positions come and go like a meatball pizza here at Fool HQ on pizza day. Hubris appears to matter to these guys; Foolish investors should embrace humility and all of is redeeming qualities.
Wrapping it all up, Chipotle-style
Will Einhorn ever be able to profitably crawl out from under his short on Chipotle? Maybe. Time will certainly tell, but I’m liking his chances less and less with each passing day. Chipotle is a fantastic business with an amazing growth story ahead. Perhaps the biggest lesson from all of this is to never follow anyone blindly into any investment. Remember, just because someone has the financial means to act on an investment and they make headlines doing it, rarely are they making calls that are in line with our interests. It’s best to just read about them in the newspaper and call it a day. After all, it’s your money; invest it Foolishly.
The article A Monumental Lesson in the Merits of Foolish Investing originally appeared on Fool.com is written by Jason Moser.
Jason Moser owns shares of Amazon.com and Chipotle Mexican Grill. The Motley Fool recommends Amazon.com, Apple, Chipotle Mexican Grill, Facebook, and Google. The Motley Fool owns shares of Amazon.com, Apple, Chipotle Mexican Grill, Facebook, and Google and has the following options: long January 2014 $50 calls on Herbalife Ltd. (NYSE:HLF).
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