Influential hedge-fund manager David Einhorn caused a stock market stir after warning against restaurant chain Chipotle Mexican Grill (NASDAQ:CMG) while speaking at the annual Value Investing Congress in New York.
Einhorn spent a large majority of his time at the podium highlighting the problems he sees facing Chipotle. One very troubling issue, he indicated, is competition from a revitalized Taco Bell (NYSE:YUM), which boasts a cheaper menu and always-creative rollout of popular new items.
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Einhorn predicted that in addition to competition and increasing food costs, Chipotle must contend with employment-related concerns. Due to new Obamacare legislation, he said, Chipotle will now have to offer health insurance coverage to employees. Einhorn also hinted towards issues with undocumented workers at Chipotle and the potential for U.S. government involvement.
By the conclusion of his presentation, Chipotle stock had tumbled 6.5 percent to $295.68. It later recovered slightly to $297.32 by the afternoon, still down 5.95 percent.
Einhorn also bashed last year’s pinata Green Mountain Coffee Roasters (NASDAQ:GMCR). He said management had “poor spending discipline” and recent patent expirations will hurt the company.
However, Einhorn — who runs the multi-billion dollar fund Greenlight Capital and whose revered commentary can often cause tangible shifts in the market — didn’t spend all his time dissecting Chipotle’s problems. He took a few minutes to express his faith in General Motors (NASDAQ:GM), which in his words is “much healthier now.” Einhorn likes GM’s recent moves, adding that he believes the carmaker is on the right track with its product refreshments.
Einhorn also likes Cigna (NYSE:CI) as a company insulated from the macroeconomic chaos.
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