Pershing Square Holdings Ltd, an investment management firm, published its fourth-quarter 2020 investor letter – a copy of which can be downloaded here. A net return of 70.2% was recorded by the fund for the year-end of 2020, outperforming its S&P 500 benchmark that delivered an 18.4% return in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Pershing Square Holdings, in their Q4 2020 investor letter, mentioned Chipotle Mexican Grill, Inc. (NYSE: CMG) and shared their insights on the company. Chipotle Mexican Grill, Inc. is a Newport Beach, California-based restaurant company that currently has a $40.5 billion market capitalization. Since the beginning of the year, CMG delivered a 3.73% return, impressively extending its 12-month gains to 128.27%. As of April 01, 2021, the stock closed at $1,438.46 per share.
Here is what Pershing Square Holdings has to say about Chipotle Mexican Grill, Inc. in their Q4 2020 investor letter:
“Chipotle’s superb 2020 performance amid a challenging backdrop was due to the successful business transformation led by CEO Brian Niccol and his team. Improved digital access, which has been a pillar of management’s transformation strategy and a growing sales driver in recent years, enabled the company to serve customers with digital pickup and delivery as the pandemic began. Only three months after the onset of COVID-19 in the U.S., Chipotle returned to growth, achieving same-store sales growth of 6% in Q4, or 20% over two years.
The pandemic accelerated a shift in the company’s digital sales mix from just under 20% of sales at the end of 2019 to 70% in April, before settling to about 50% in July, a level which has been maintained through the start of 2021. Management believes that the majority of these digital sales are incremental, noting that in the 60% of stores with dining rooms open, 80% to 85% of digital sales gains are being retained while 50% to 60% of in-store sales have been recovered.
Management remains confident that the company will emerge even stronger from the COVID-19 pandemic as it continues to execute on a number of long-term strategic initiatives. Chipotle plans to open 200 new restaurants in 2021, a 24% increase from 2020 opening levels, with more than 70% of these new locations featuring a Chipotlane, the company’s high-return, digital drive-thru format.
Chipotle has already launched two new menu innovations in 2021, including cauliflower rice, which was introduced in January and has garnered very favorable early feedback, and the much-anticipated quesadilla, which was launched as a digital-only menu item on March 11th. Chipotle Rewards, a highly effective marketing tool for the company, continues to see enrollment growth with over 19.5 million members as of year-end, compared to 8.5 million members at the end of 2019.
Chipotle is extremely well positioned to execute on the company’s long-term strategy, which should drive substantial shareholder value in the future.”
Copyright: gdolgikh / 123RF Stock Photo
Our calculations show that Chipotle Mexican Grill, Inc. (NYSE: CMG) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Chipotle Mexican Grill, Inc. was in 35 hedge fund portfolios, compared to 52 funds in the third quarter. CMG delivered a 3.73% return in the past 3 months.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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Disclosure: None. This article is originally published at Insider Monkey.
