Rowan Street Capital, an investment management company, released its first quarter 2024 investor letter. A copy of the letter can be downloaded here. Rowan Street Capital celebrated its 9th anniversary in March 2024. The fund generated a +25.6% (net) return in the first quarter. Driven by its top 4 holdings (META, SPOT, TTD, and SHOP), the fund generated a +70.6% (net) return over the last 12 months. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Rowan Street Capital featured stocks like Chipotle Mexican Grill, Inc. (NYSE:CMG) in the first quarter 2024 investor letter. Headquartered in Newport Beach, California, Chipotle Mexican Grill, Inc. (NYSE:CMG) owns and operates Chipotle Mexican Grill restaurants. On May 10, 2024, Chipotle Mexican Grill, Inc. (NYSE:CMG) stock closed at $3,239.23 per share. One-month return of Chipotle Mexican Grill, Inc. (NYSE:CMG) was 9.52%, and its shares gained 58.35% of their value over the last 52 weeks. Chipotle Mexican Grill, Inc. (NYSE:CMG) has a market capitalization of $88.972 billion.
Rowan Street Capital stated the following regarding Chipotle Mexican Grill, Inc. (NYSE:CMG) in its first quarter 2024 investor letter:
“The best investment ideas are simple. We have previously written about Chipotle Mexican Grill, Inc. (NYSE:CMG). It turned out that this was our best investment idea since starting the fund. The stock is up 10x since we first invested at the end of 2017 (~47% annualized). Sounds absolutely incredible, except that your managers sold CMG back in 2018 (thinking that the stock had gotten ahead of itself), and proudly booked an 85% profit in 6 months, patting ourselves in the back. Interestingly, when we wrote about this in our 2019 letter, describing our big mistake to sell, the stock still went up +270% since that letter, delivering an impressive 30% annual return. This is an incredibly important point! You do not get many Chipotles in your investing career. Companies like these are super rare and the opportunity to buy them at an attractive price (which we got in 2017) is even rarer. Booking a quick profit, paying the capital gains tax and thinking that you will find another CMG to invest your proceeds into is usually delusional.
Along with our personal investment case of CMG, let us compare that to the experience that Bill Ackman had with the same investment. He is a famous hedge fund manager that we greatly admire, who has achieved an incredible track record in the past 20 years running Pershing Square. Bill Ackman has owned the restaurant stock since the third quarter of 2016 at an initial cost basis of about $411 per share (our cost basis was $289). Originally, Mr. Ackman bought 2.88 million shares. He was wise to hold on to CMG stock and it still is the top position in his fund (18% weight). But, if you follow his 13F filings, which are the public filings disclosing large investment manager’s holdings of publicly traded securities, he kept trimming his position as the stock went up. We calculated that if he just sat on his original 2.88 million shares and didn’t sell a share, his position would be worth $8.8 billion today. This would represent ~50% of his entire firms’ assets under management (AUM). But he only has $1.8 billion invested in CMG as of Q1 2024. As Charlie Munger said: ““The first rule of compounding is to never interrupt it unnecessarily.”…” (Click here to read the full text)
A chef plating up a wide variety of dishes for a restaurant chain.
Chipotle Mexican Grill, Inc. (NYSE:CMG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Chipotle Mexican Grill Inc (NYSE:CMG) was held by 56 hedge fund portfolios, down from 57 in the previous quarter, according to our database.
We discussed Chipotle Mexican Grill, Inc. (NYSE:CMG) in another article and shared views of Artisan Mid Cap Fund which believes Chipotle Mexican Grill, Inc. (NYSE:CMG) has a long runway for growth. Investment management firms ClearBridge Investments and Pershing Square Holdings also expressed their optimism about the long-term growth of Chipotle Mexican Grill, Inc. (NYSE:CMG) in their previous investor letters. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
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