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Should You Avoid Chipotle Mexican Grill, Inc. (CMG)?

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Chipotle Mexican Grill, Inc. (NYSE:CMG) was in 18 hedge funds’ portfolio at the end of December. CMG shareholders have witnessed a decrease in hedge fund interest recently. There were 24 hedge funds in our database with CMG positions at the end of the previous quarter. In a piece of news today, the price target and estimates of Chipotle Mexican Grill, Inc. (NYSE:CMG) were upgraded at Lazard.

Chipotle Mexican Grill, Inc. (NYSE:CMG)

At the moment, there are plenty of methods shareholders can use to analyze the equity markets. Two of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite investment managers can outpace the market by a significant amount (see just how much).

Equally as important, optimistic insider trading activity is another way to parse down the world of equities. Obviously, there are lots of reasons for an upper level exec to sell shares of his or her company, but only one, very clear reason why they would behave bullishly. Various empirical studies have demonstrated the impressive potential of this tactic if investors understand where to look (learn more here).

Consequently, it’s important to take a glance at the key action regarding Chipotle Mexican Grill, Inc. (NYSE:CMG).

How have hedgies been trading Chipotle Mexican Grill, Inc. (NYSE:CMG)?

In preparation for this year, a total of 18 of the hedge funds we track were bullish in this stock, a change of -25% from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their stakes considerably.

Of the funds we track, Eric Mindich’s Eton Park Capital had the most valuable position in Chipotle Mexican Grill, Inc. (NYSE:CMG), worth close to $104.1 million, accounting for 2.2% of its total 13F portfolio. The second largest stake is held by D. E. Shaw of D E Shaw, with a $88.3 million call position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedgies that hold long positions include, Jim Simons’s Renaissance Technologies and Ken Griffin’s Citadel Investment Group.

Due to the fact that Chipotle Mexican Grill, Inc. (NYSE:CMG) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of fund managers that elected to cut their full holdings in Q4. Interestingly, Philippe Laffont’s Coatue Management cut the biggest stake of the 450+ funds we key on, comprising close to $131.6 million in stock., and Patrick McCormack of Tiger Consumer Management was right behind this move, as the fund dropped about $89.2 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 6 funds in Q4.

How have insiders been trading Chipotle Mexican Grill, Inc. (NYSE:CMG)?

Bullish insider trading is particularly usable when the primary stock in question has seen transactions within the past six months. Over the latest half-year time frame, Chipotle Mexican Grill, Inc. (NYSE:CMG) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Chipotle Mexican Grill, Inc. (NYSE:CMG). These stocks are Yum! Brands, Inc. (NYSE:YUM), Dunkin Brands Group Inc (NASDAQ:DNKN), Darden Restaurants, Inc. (NYSE:DRI), Burger King Worldwide Inc (NYSE:BKW), and Tim Hortons Inc. (USA) (NYSE:THI). All of these stocks are in the restaurants industry and their market caps are similar to CMG’s market cap.

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