Is Chipotle Mexican Grill, Inc. (CMG) Going to Burn These Hedge Funds?

In this article you are going to find out whether hedge funds think Chipotle Mexican Grill, Inc. (NYSE:CMG) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Chipotle Mexican Grill, Inc. (NYSE:CMG) an attractive investment today? The best stock pickers were getting more optimistic. The number of bullish hedge fund positions improved by 4 recently. 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). There were 35 hedge funds in our database with CMG positions at the end of the second quarter.

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. Now we’re going to take a look at the latest 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?

Heading into the fourth quarter of 2021, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards CMG over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Pershing Square held the most valuable stake in Chipotle Mexican Grill, Inc. (NYSE:CMG), which was worth $2026 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $1317.9 million worth of shares. 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, dishing out 10.09 percent of its 13F equity portfolio to CMG.

As one would reasonably expect, key money managers have been driving this bullishness. Tudor Investment Corp, managed by Paul Tudor Jones, established 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 made a $15 million investment in the stock 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 now take a look at hedge fund activity in other stocks similar to Chipotle Mexican Grill, Inc. (NYSE:CMG). 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 values are closest to CMG’s market value.

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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 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 -9.6% since the end of September (through 11/30) 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 most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.