Here is What Hedge Funds Think About Chipotle Mexican Grill, Inc. (CMG)

Is Chipotle Mexican Grill, Inc. (NYSE:CMG) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. 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 find the latest market-moving information.

Is Chipotle Mexican Grill, Inc. (NYSE:CMG) a bargain? The best stock pickers are taking a bearish view. The number of bullish hedge fund bets retreated by 8 lately. CMG was in 28 hedge funds’ portfolios at the end of September. There were 36 hedge funds in our database with CMG holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as TransCanada Corporation (USA) (NYSE:TRP), AutoZone, Inc. (NYSE:AZO), and Canadian Pacific Railway Limited (USA) (NYSE:CP) to gather more data points.

In the financial world there are numerous metrics market participants put to use to size up publicly traded companies. A pair of the most innovative metrics is composed of hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top money managers can outclass the market by a solid amount (see the details here).

With all of this in mind, we’re going to review the latest action regarding Chipotle Mexican Grill, Inc. (NYSE:CMG).

What does the smart money think about Chipotle Mexican Grill, Inc. (NYSE:CMG)?

Heading into Q4, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from the second quarter. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Chipotle Mexican Grill, Inc. (NYSE:CMG). Renaissance Technologies has a $345.3 million position in the stock, comprising 0.8% of its 13F portfolio. On Renaissance Technologies’s heels is Citadel Investment Group, managed by Ken Griffin, which holds a $196.4 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish encompass Ken Griffin’s Citadel Investment Group, and Matthew Hulsizer’s PEAK6 Capital Management.

Because Chipotle Mexican Grill, Inc. (NYSE:CMG) has experienced a declination in interest from the aggregate hedge fund industry, it’s easy to see that there exist a select few hedgies that elected to cut their full holdings by the end of the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $72.9 million in stock, and Ray Dalio’s Bridgewater Associates was right behind this move, as the fund said goodbye to about $17.4 million worth. These moves are interesting, as aggregate hedge fund interest fell by 8 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Chipotle Mexican Grill, Inc. (NYSE:CMG). These stocks are TransCanada Corporation (USA) (NYSE:TRP), AutoZone, Inc. (NYSE:AZO), Canadian Pacific Railway Limited (USA) (NYSE:CP), and Boston Scientific Corporation (NYSE:BSX). This group of stocks’ market caps are similar to CMG’s market cap.

As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $1769 million. That figure was $1100 million in CMG’s case. AutoZone, Inc. (NYSE:AZO) is the most popular stock in this table, while the least popular one is TransCanada Corporation (USA) (NYSE:TRP). With 28 bullish hedge fund positions, Chipotle Mexican Grill, Inc. (NYSE:CMG) is not the least nor the most popular stock in this group. It has not attracted much attention from investors, which may imply it is not a stock worth considering. Therefore, we’d rather spend our time focusing on stocks that hedge funds are collectively most fond of, and, in this case, AZO might be a better alternative.