Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Pershing Square’s Q3 2017 Investor Letter Comments on Chipotle Mexican Grill, Inc. (CMG)

Bill Ackman‘s Pershing Square Capital Management has recently released a third quarter investor letter, and in it, the hedge fund talks about its investment in Chipotle Mexican Grill, Inc. (NYSE:CMG). Let’s take a closer look:

In terms of its year-to-date performance, shares of the burrito chain Chipotle Mexican Grill, Inc. (NYSE:CMG) haven’t done too well, falling around 20%. The equity has also fallen from around $500 in early May as sentiment around the stock has weakened. Pershing Square acknowledges the challenges, writing that “the last six months have been challenging for Chipotle’s brand’, shareholders, and other stakeholders”.

mexican, grill, exterior, corner, sign, building, outdoor, vegetarian, windows, street, brick, brand, name, restaurant

Susan Law Cain /

Ackman’s fund is nevertheless bullish as it believes there is ‘significant long-term growth opportunity’. Before investing, Pershing Square knew that its investment could be volatile, and the fund is confident that ‘with the right initiatives and execution’, that Chipotle Mexican Grill, Inc. (NYSE:CMG) could undergo a successful turnaround. The fund notes that Chipotle Mexican Grill, Inc. (NYSE:CMG) management has been optimizing operations to deliver a great experience for guests, and that the company’s digital initiatives ‘continue to progress’. The company’s mobile app also underwent its first major revamp in many years, and includes features that make it easier for customers to buy from Chipotle Mexican Grill, Inc. (NYSE:CMG).

Bill Ackman
Bill Ackman
Pershing Square

Although Chipotle Mexican Grill, Inc. (NYSE:CMG) has a strong balance sheet with substantial net cash, Pershing Square believes the stock has been volatile due to the fact that it “is highly dependent on investor’s estimates of future growth, average unit volumes, and store margins”. When the collective market estimates of those values change, the estimate of Chipotle’s intrinsic value changes a lot, which ultimately affects the chain’s stock price. Ackman’s fund nevertheless believes that ‘if the company begins to show progress on these metrics, we would expect the stock price to respond accordingly to the upside’.

Follow Chipotle Mexican Grill Inc (NYSE:CMG)
Trade (NYSE:CMG) Now!

Disclosure: None

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.