Two weeks ago I warned you that another company was about to
at this week's Value Investing Congress. "Which Company Will
David Einhorn Badmouth Next," I wondered.
The famed hedge fund manager slammed the burrito and
quesadilla chain today in his annual presentation at the New York
conference for value investors. Einhorn said he is short-selling
Chipotle shares because of increased competition from rival
, which is owned by
Yum! Brands (
The sluggish U.S. economy is making cheap fast-food chains
such as Taco Bell more appealing to the average American. While
Chipotle isn't exactly pricey, it's more expensive than Taco
Obamacare is another thing that will hurt Chipotle's business,
The president's new health care laws will force companies such
as Chipotle to offer insurance coverage to its employees -
something that is sure to weigh heavily on costs, Einhorn
As usual, Einhorn's criticisms of a company are doing serious
damage to its stock. Chipotle shares are down 3.2% in the
two-plus hours since Einhorn wrapped up his presentation just
after 11 a.m. eastern.
If it's anything like last year's Einhorn "victim" -
Green Mountain Coffee Roasters
- Chipotle's decline likely won't end there. GMCR's once
high-riding stock fell 10% in a matter of hours last year after
Einhorn slammed the specialty coffee company at the Value
Investing Congress. His critiques sent GMCR on a yearlong death
spiral in which its shares were reduced by two thirds.
So that doesn't bode well for Chipotle.
One company that actually got Einhorn's blessing this morning
General Motors (
Einhorn said that the leading U.S. automaker is "much healthier
now", with a more appealing pipeline of cars. The praise has
pushed GM shares up 3.1% in mid-day trading.