Doubleline's Jeffrey Gundlach Calls Chipotle A Good Short
Doubleline's Jeffrey Gundlach said Wednesday he's been shorting Chipolte Mexican Grill, Inc. (NYSE: CMG) stock for "awhile," and shares plunged $6.46 from a daily high of $401.05.
Gundlach told CNBC he increased his short position by eightfold, which sent the stock to a low of $399.55 before it began inching back upward.
The recently-hosted bull-bear debate related to Chipotle indicated investors were “largely negative” or had a “concerned bias” on the shares, Deutsche Bank’s Brett Levy said in a report.
Levy added that Chipotle’s near-term comps would be “significantly negative for some time.” He maintained a Sell rating on the stock, with a price target of $280.
With comps likely to remain negative, management is focusing on marketing, unit-level execution and infrastructure investments, which could impact Chipotle’s margins. Some investors seemed willing to give management a bit more time, provided the company’s same-store sales didn't decline, Levy mentioned.
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