3. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Pershing Square’s Stake Value: $1,948,818,000
Percentage of Pershing Square’s 13F Portfolio: 18.07%
Number of Hedge Fund Holders: 47
Chipotle Mexican Grill, Inc. (NYSE:CMG) is a California-based company that operates restaurants under the Chipotle Mexican Grill brand. The company has restaurants in the United States, Canada, the United Kingdom, France, Germany, and the rest of Europe. Pershing Square held over 1 million Chipotle Mexican Grill, Inc. (NYSE:CMG) shares in the fourth quarter of 2021, worth $1.94 billion, representing 18.07% of the total securities.
Chipotle Mexican Grill, Inc. (NYSE:CMG) reported earnings for the fourth quarter of 2021 on February 8, posting an EPS of $5.58, exceeding estimates by $0.29. Revenue for the period stood at $1.96 billion, up approximately 22% from the prior-year quarter, topping market consensus by $1.76 million.
On March 30, KeyBanc analyst Eric Gonzalez maintained an Overweight rating on Chipotle Mexican Grill, Inc. (NYSE:CMG), as he believes the company has expanded the implementation of its 5%-6% price increase to an additional 810 stores. The analyst does not expect prominent consumer retaliation and believes that a nationwide price increase in the 5%-6% range suggests upside to current consensus margin/EPS estimates.
According to Insider Monkey’s Q4 data, 47 hedge funds were bullish on Chipotle Mexican Grill, Inc. (NYSE:CMG), compared to 39 funds in the earlier quarter. The total stakes held in Q4 amounted to $3.5 billion. Alkeon Capital Management is one of the leading stakeholders of the company, with shares worth over $502 million.
Here is what Pershing Square Capital Management has to say about Chipotle Mexican Grill, Inc. (NYSE:CMG) in its Q4 2021 investor letter:
“Chipotle’s superb performance continued in 2021 driven by ongoing strength in digital sales and a recovery of in-store ordering.
Average restaurant sales have now eclipsed the 2015 peak of $2.5mm.
-Same-store sales grew 19% in 2021, or 21% from 2019 levels.
-Strong contribution from innovations including the quesadilla and smoked brisket.
-Superlative value proposition drives pricing power and protects margins.
-Chicken burrito/bowl still priced below $8 in most parts of the country.
-Longer-term opportunity to drive average restaurant sales well beyond $3mm.
Chipotle has a long runway for robust growth.
✓ New unit growth algorithm of 8% to 10% annually.
✓ Chipotlane digital drive-thrus now in 12% of existing and 80% of new stores.
✓ Menu innovations and loyalty program enhancements.
✓ Operating leverage with 40% incremental restaurant margins.
✓ Plans for international expansion given success achieved in Canada. CMG’s share price increased 26% in 2021 and has decreased 16% year-todate in 2022.”
