Walk by any Chipotle Mexican Grill (CMG), and the lines for burritos and tacos usually appear endless. Investors are hungry for the stock too. It's up nearly 30% this year and approaching 52-week highs.
That's not a good thing for two fund managers who have been making big bets against Chipotle's stock. Both Greenlight Capital's David Einhorn and Doubleline Capital's Jeff Gundlach have said they are shorting Chipotle.
Through mid-2012, Chipotle had been one of the best-performing U.S. stocks. In October 2012, Einhorn made a case for betting against Chipotle's stock. Investors initially fled the stock, but have since returned. It's up nearly 30% this year.
It's hard to fight restaurant stocks in general. Consumers have been gobbling them up, particularly those of chains considered fresh and healthy.
The chain Noodles & Co. (NDLS) went public last week. Its stock doubled on its first day of trading and is now trading at nearly triple its IPO price.
Calling Noodles the next Chipotle was a compliment to the chain on its IPO date (Chipotle's stock has risen 16-fold since its IPO seven years ago).
This week, Noodles looks like it is giving Chipotle a boost. Investors see Noodle's stock rising and have decided Chipotle has even more room to run.
Hedge fund managers might like Chipotle's burritos, but some are betting against the company's stock.
Last October, Greenlight Capital's David Einhorn revealed a bet against Chipotle Mexican Grill (CMG). On Wednesday, bond fund manager Jeffrey Gundlach of investment firm DoubeLine Capital joined him in talking down the fast food chain.
"I like the products," Gundlach admitted. Yet, he said, "A gourmet burrito is an oxymoron. All you need to compete with its MOREMaureen Farrell - May 9, 2013 12:16 AM ET
It looks like David Einhorn's latest prediction may be coming true.
Shares of Chipotle Mexican Grill (CMG), which Einhorn recently recommended shorting, got slammed after the casual restaurant chain reported earnings that fell short of forecasts. And, although revenue was roughly in line with estimates, investors were disappointed.
Chipotle's stock sank more than 10% after-hours Thursday. On Friday, shares fell more than 15% before gaining back some ground.
I fortuitously bumped into Einhorn MOREMaureen Farrell - Oct 19, 2012 10:23 AM ET
Hedge fund manager David Einhorn's newest short target: Chipotle Mexican Grill (CMG).
Greenlight Capital's Einhorn thinks Taco Bell, owned by Yum Brands (YUM), will eat Chipotle's lunch with its new Cantina-style menu.
Chipotle was one of four stocks that Einhorn discussed during his presentation at the Value Investing Congress in New York. He also spelled out a case for why investors should buy General Motors (GM) and health insurer Cigna (CI). MOREMaureen Farrell - Oct 2, 2012 12:56 PM ET
Not a member yet?Sign up now for a free account
|GM raising Corvette prices|
|Boeing reports wing cracks on Dreamliners|
|Albertsons to merge with Safeway|
|Bitcoin matters. Ignore the media circus.|
|Boeing to end pension plans for non-union employees|