Here’s Why You Must Consider Investing in Chipotle (CMG)

Carillon Tower Advisers, an investment management firm, published its “Carillon Eagle Mid Cap Growth Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. The Russell Midcap® Growth Index (down 0.76%) marginally outperformed its Russell Midcap® Value Index (down 1.01%) counterpart. Individual sectors across the Russell Midcap Growth were largely mixed, with financials (up 6.83%), real estate (up 4.05%), and information technology (up 2.15%) leading the way. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

Carillon Tower Advisers, in its Q3 2021 investor letter, mentioned Chipotle Mexican Grill, Inc. (NYSE: CMG) and discussed its stance on the firm. Chipotle Mexican Grill, Inc. is a Newport Beach, California-based restaurant company with a $50.4 billion market capitalization. CMG delivered a 29.40% return since the beginning of the year, while its 12-month returns are up by 40.39%. The stock closed at $1,794.35 per share on November 5, 2021.

Here is what Carillon Tower Advisers has to say about Chipotle Mexican Grill, Inc. in its Q3 2021 investor letter:

Chipotle Mexican Grill owns and operates fast-casual, fresh Mexican food restaurants. The company reported very strong quarterly earnings and an outlook ahead of investor expectations, sending the stock higher. Chipotle’s business is performing well and is accelerating as consumers return to more normalized levels of in-restaurant dining. Additionally, the company has recently implemented some price increases that give Chipotle the flexibility to successfully navigate the higher commodity and wage cost environment.”

Based on our calculations, Chipotle Mexican Grill, Inc. (NYSE: CMG) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. CMG was in 35 hedge fund portfolios at the end of the first half of 2021, compared to 41 funds in the previous quarter. Chipotle Mexican Grill, Inc. (NYSE: CMG) delivered a -4.30% return in the past 3 months.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

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Disclosure: None. This article is originally published at Insider Monkey.