Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Chipotle Mexican Grill, Inc. (NYSE:CMG) based on that data and determine whether they were really smart about the stock.
Chipotle Mexican Grill, Inc. (NYSE:CMG) investors should pay attention to an increase in hedge fund sentiment of late. Chipotle Mexican Grill, Inc. (NYSE:CMG) was in 39 hedge funds’ portfolios at the end of September. The all time high for this statistic is 52. Our calculations also showed that CMG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a look at the new hedge fund action surrounding Chipotle Mexican Grill, Inc. (NYSE:CMG).
Bill Ackman of Pershing Square
Do Hedge Funds Think CMG Is A Good Stock To Buy Now?
At the end of September, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the second quarter of 2021. On the other hand, there were a total of 52 hedge funds with a bullish position in CMG a year ago. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Pershing Square was the largest shareholder of Chipotle Mexican Grill, Inc. (NYSE:CMG), with a stake worth $2026 million reported as of the end of September. Trailing Pershing Square was Citadel Investment Group, which amassed a stake valued at $1317.9 million. Alkeon Capital Management, D E Shaw, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Pershing Square allocated the biggest weight to Chipotle Mexican Grill, Inc. (NYSE:CMG), around 21.41% of its 13F portfolio. Emerson Point Capital is also relatively very bullish on the stock, earmarking 10.09 percent of its 13F equity portfolio to CMG.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Tudor Investment Corp, managed by Paul Tudor Jones, created the most valuable call position in Chipotle Mexican Grill, Inc. (NYSE:CMG). Tudor Investment Corp had $22.4 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $15 million position during the quarter. The following funds were also among the new CMG investors: Anthony Joseph Vaccarino’s North Fourth Asset Management, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Chipotle Mexican Grill, Inc. (NYSE:CMG) but similarly valued. These stocks are KLA Corporation (NASDAQ:KLAC), DocuSign, Inc. (NASDAQ:DOCU), MSCI Inc (NYSE:MSCI), Canadian Imperial Bank of Commerce (NYSE:CM), Humana Inc (NYSE:HUM), Marvell Technology, Inc. (NASDAQ:MRVL), and Dollar General Corp. (NYSE:DG). This group of stocks’ market caps are closest to CMG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KLAC | 44 | 1844123 | -1 |
| DOCU | 51 | 4238147 | -7 |
| MSCI | 43 | 997992 | 6 |
| CM | 13 | 289714 | -2 |
| HUM | 60 | 2900740 | 1 |
| MRVL | 45 | 1152936 | -6 |
| DG | 46 | 1905639 | 1 |
| Average | 43.1 | 1904184 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 43.1 hedge funds with bullish positions and the average amount invested in these stocks was $1904 million. That figure was $3688 million in CMG’s case. Humana Inc (NYSE:HUM) is the most popular stock in this table. On the other hand Canadian Imperial Bank of Commerce (NYSE:CM) is the least popular one with only 13 bullish hedge fund positions. Chipotle Mexican Grill, Inc. (NYSE:CMG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CMG is 59.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately, CMG wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CMG investors were disappointed as the stock returned -18.3% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
Follow Chipotle Mexican Grill Inc (NYSE:CMG)
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Disclosure: None. This article was originally published at Insider Monkey.
