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 core business is a taco truck."
Gundlach made his last minute, seemingly offhand reference to the restaurant chain at the end of a presentation denigrating the Federal Reserve's monetary policy tactics.
Gundlach told investors at the Ira Sohn conference in New York to prepare for a world of unending quantitative easing, and said they shouldn't wasting time readying for higher interest rates. A big chunk of the presentation echoed one delivered in California last week, in which Gundlach encouraged the audience to keep buying Treasuries.
Gundlach's official recommendation to short Chipotle wasn't completely new either. He first made a bearish call on the company last month.
Bets against Chipotle haven't paid off just yet. The stock is up 16% since Einhorn revealed his position last year, even though shares dropped precipitously right after Einhorn revealed his reasons for betting against the chain.
Known for his prescient short bet against Lehman Brothers ahead of the bank's implosion, Einhorn has become one of the world's most watched short-sellers.
But Einhorn, the final presenter at the conference, outlined a case for another stock, albeit a troubled one that he wants to fix: offshore oil and gas drilling company Oil States International (OIS). He admitted that his idea recently became less original. The activist hedge fund Jana Partners revealed its own 9% stake in the company last week, while Einhorn's presentations was in the "fourth or fifth draft," he said.
Einhorn, who also said he's acquired a stake in OIS, made a case for why the company is worth more in pieces, or as a converted Real Estate Investment Trust. Shares of OIS rose in after-hours trading Wednesday.
Other stocks moved on headlines from the Sohn conference too. Disk drive makers Seagate (STX) and Western Digital (WDC) fell as noted short seller Jim Chanos recommended betting against them due to concerns about the PC market. And mortgage servicing company Ocwen Financial (OCN) rose after Steve Eisman, who like Einhorn was very skeptical of the financial sector in 2008, said that he thought the U.S. housing market would continue to recover.
The gold bugs have come out to play.
Gold bounced back Monday after taking a massive beating over the past week or so.
Early Monday, gold prices popped back above $1,400 for the first time in a week. Prices are still a far cry from their record $1,900 level but the modest bounce is encouraging for gold bugs.
It was exactly one week ago that gold prices plunged more than 9% in their MORECatherine Tymkiw - Apr 22, 2013 12:02 PM ET
It's a tough week to be a retailer in search of customers. First, the shares of J.C. Penney (JCP) cratered after the Ron Johnson-led retailer reported abysmal fourth-quarter numbers Wednesday night.
Next up: Sears (SHLD). The iconic retailer can't turn a profit or get customers excited about its merchandise or Kmart's. After reporting yet another quarter of steep losses early Thursday, Sears' stock dropped nearly 5%.
Releasing results so close to JCPenney at least makes MOREMaureen Farrell - Feb 28, 2013 3:15 PM ET
It's Herbalife's turn.
As hedge fund titans Bill Ackman and Dan Loeb square off over the company's sales practices, the company's top executives played defense.
"We are confident that you will see that we're a legitimate company with legitimate customers," Herbalife CEO Michael Johnson told investors and analysts gathered at the Four Seasons in midtown Manhattan Thursday. Johnson called the opportunity to address the crowd "unusual but incredible."
Ackman, who runs Pershing MOREMaureen Farrell - Jan 10, 2013 10:31 AM ET
This article was published in the December issue of Money magazine.
The world of hedge funds may be shrouded in secrecy. But savvy investors can profit handsomely by following the public moves of some of the industry's high-profile players, especially as many are taking a more active role in cleaning up troubled companies.
In July 2011, Carl Icahn, one of the most famous "agitator" investors, put pressure on cellphone maker Motorola Mobility MOREPaul R. La Monica - Nov 28, 2012 9:45 AM ET
Hedge funds are betting on a disaster hitting the financial markets within the next several quarters, with managers holding onto historic levels of cash.
That so-called dry powder gives them the cash they need to quickly jump in if markets sell off, according to numerous hedge fund managers and industry consultants.
"Most hedge funds I see are carrying lower market exposure than I've seen in some time," said Brad Balter, MOREMaureen Farrell - Aug 23, 2012 8:01 AM ET
Hedge fund manager Dan Loeb, once a supporter of President Obama, is now a critic. But he appears to think the president's health care plan will be a boon for health insurers. And he's not alone.
Loeb and noted short seller David Einhorn accumulated new positions in multiple health insurance stocks at some point in the second quarter, according to SEC filings released Tuesday.
Both Loeb's Third Point Capital and Einhorn's Greenlight MOREMaureen Farrell - Aug 15, 2012 3:26 PM ET
Wall Street has been playing a game of musical chairs, and the tempo is picking up.
From UBS to Deutsche Bank to JPMorgan Chase to Citigroup, executives are hopping to rival banks at a rapid clip. With low trading volume and tough market conditions, many chairs are also vanishing when the music stops.
Among the lost chairs so far: Mitch Moore, the global head of UBS's (UBS) prime brokerage unit, resigned last MOREMaureen Farrell - Jun 18, 2012 1:50 PM ET
After six months of losing to the broader market, hedge funds finally beat the S&P 500's performance in April, slipping only 0.6% compared to the index's 0.8% decline. But that wasn't enough to lure in investors.
Hedge funds, which have an estimated $1.7 trillion in assets combined, saw investors sell off an estimated $5.1 billion worth in April, reversing two consecutive months of inflows, according to a monthly report from investment research MOREHibah Yousuf - Jun 12, 2012 4:59 PM ET
There's no doubt that hedge funds have had a tough time beating the broader stock market in recent years, but they've still got an edge over individual investors when it comes to stock picking. And if that's your thing, investing like a hedge fund all-star just got easier.
The Top Guru Holdings Index ETF (GURU), which began trading Tuesday, invests in the single biggest holding of 68 top hedge funds, including MOREHibah Yousuf - Jun 5, 2012 4:14 PM ET
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