Below is an excerpt from a Barron's article ("Chipotle: Why One Big Bear Became a Bull") published back in December.
Barron’s has long been bearish on the shares of Chipotle Mexican Grill (CMG), and it’s been the right call to date. Our bearish views cited many factors over the years, now better recognized, not the least of which were outbreaks of customer sickness from E. Coli and salmonella in some cases, in numerous incidents around the country.
Many of our articles quoted the views of veteran industry analyst Howard Penney of Hedgeye Risk Management, perhaps the most outspoken Chipotle bear on the Street and a big critic of CEO and founder Steve Ells.
Penney recently did an about face on the stock, however, after Ells said November 29 that he would step down once a replacement was found. Penney moved his rating on Chipotle to his Best Ideas Buy list from the Best Ideas short list on Dec. 4, and the shares jumped to $333 from $307 before sliding back to $310 today.
Shares of Chipotle are up over 40% since Penney made the bullish pivot on Chipotle. The S&P 500 is up around 4%.
Here's a 2-minute clip which sheds some light on his thinking.
For info on how you can access Howard Penney's institutional research email email@example.com.