Billionaire David Einhorn Told You To Buy GM

One of the short picks from the VIC was Chipotle Mexican Grill, Inc. (NYSE:CMG). This stock is down 7% from the end of September, though that reflects a recovery from a sharp drop in mid October. Everyone knows that Chipotle is a great growth story- last quarter, revenue was up 18% from a year ago, driving a 20% rise in net income- the only question is how long the high growth rates can continue. The stock carries trailing and forward P/Es of 34 and 28, respectively. In his presentation, Einhorn claimed that the company will see increased competition from Taco Bell, which is retooling for both a younger and a higher-end market. Read more about Einhorn’s presentation on Chipotle.

Einhorn’s other short was a re-run of his famous call to short Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR). “What do you call a stock that’s down 90%?” he asked, likely in reference to the company. “A stock that was down 80%”- where Green Mountain was then trading compared to a year ago- “and then got cut in half.” See why Einhorn went after Green Mountain. Unfortunately for him, Green Mountain is actually up 76% from the beginning of October. Since it had been at such a low level before, it is still well down from its peak, and Greenlight’s short position is likely still profitable, but investors who only got in after his presentation have been burned. In fact, the losses that an Einhorn follower would have made on this short more than match the gains that would have come on a Chipotle short and on long positions in GM and Cigna.