Wall Street is a data-dominated landscape, and it can be easy for investors to allow this overabundance of data to cause them to miss something important.
For example, Feb. 14 represented a day where most Americans went the extra mile to ensure their significant other knew they were special. But for institutional investors with at least $100 million in assets under management (AUM), Valentine's Day marked the deadline to file Form 13F with the Securities and Exchange Commission. A 13F allows investors to see which stocks Wall Street's smartest money managers purchased and sold in the latest quarter.
Although 13Fs aren't without their flaws -- since they're filed up to 45 calendar days after a quarter ends, they can provide stale data for active hedge funds -- they're ideal for highlighting the stocks, industries, sectors, and trends that are piquing the interest of Wall Street's most-successful investors.
Image source: Getty Images.
While Warren Buffett has historically been the most-followed billionaire investor, he's far from the only asset manager that can generate big profits on Wall Street. For instance, Coatue Management's billionaire chief Philippe Laffont is highly successful and overseeing close to $30 billion in AUM. In particular, Laffont has a penchant for high-growth companies that rely heavily on innovation.
During the December-ended quarter, Laffont completely exited his fund's stake in one of the top-performing consumer brands and chose to pile into an exceptionally volatile artificial intelligence (AI) stock-split stock.
Coatue Management's Laffont jettisoned this highflier that's up 5,500% since its IPO
Perhaps the biggest eyebrow-raising move made during the fourth quarter was jettisoning all 4,575,054 shares of fast-casual restaurant chain Chipotle Mexican Grill (CMG 4.49%). Shares of Chipotle have gained a sizzling 5,530% since their initial public offering (IPO) in January 2006, which makes it one of the top-performing consumer goods stocks over the last two decades.
The logical reason for this selling activity may very well be simple profit-taking. Laffont presumably built this sizable position in Chipotle when its stock tumbled in July 2024. Between late July and the midpoint of December, shares rallied by about 30%. With Coatue being a relatively active hedge fund, this move may have been more than enough of an impetus for Laffont to cut bait and cash in his chips.
The bigger concern is there may be more to Laffont's exit than just some benign profit-taking.
NYSE: CMG
Key Data Points
To begin with, Chipotle's stellar operating results have been partially inflated by new store openings. Though sales surged 13.1% during the fourth quarter to $2.83 billion from the prior-year period, comparable restaurant sales (i.e., comparing the sales of stores open for at least one year) rose by a far more modest 5.4%. While this does signify that consumers are spending more in its stores, it's not the robust same-store sales growth that Chipotle investors have become accustomed to.
Building on this point, there's also concern about Chipotle Mexican Grill's valuation.
On one hand, a valid argument can be made that its stock deserves a premium earnings multiple. Chipotle's promise to use responsibly raised meats and locally sourced vegetables (when possible), coupled with its innovative capacity, such as the introduction and proliferation of its dedicated mobile order drive-thru lanes (Chipotlanes), have transformed its business and sustained a superior organic growth rate among fast-casual restaurant chains.
On the other hand, Chipotle's organic growth rate is slowing, inflation is becoming a potential nuisance to its margins, and its shares are valued at 32 times estimated earnings per share (EPS) for 2026. Paying more than 30 times EPS for mid-single-digit organic growth in the food industry is quite the premium.
Although it wouldn't be surprising to see Chipotle Mexican Grill outperform its peers over the long run, a sizable near-term pullback may be in order.
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Billionaire Philippe Laffont took a big bite of this controversial AI stock-split stock
However, billionaire Philippe Laffont did some buying, too, during the December-ended quarter. Among his most interesting purchases was that of customizable rack server and storage solutions specialist Super Micro Computer (SMCI 2.68%).
Prior to Supermicro completing a 10-for-1 forward stock split following the closing bell on Sept. 30, Coatue Management held 24,161 shares of the company. But following this split, Laffont's fund closed out 2024 with 8,866,735 shares of Supermicro. This means, at minimum, more than 8.6 million shares were purchased during the fourth quarter.
The premier catalyst for Super Micro Computer is its ties to the AI revolution. Though most investors are focused on graphics processing unit (GPU) giant Nvidia, it takes a lot of infrastructure to build out an AI-accelerated data center. Supermicro's customizable rack servers, which incorporate Nvidia's AI-GPUs, are exceptionally popular with businesses.
In fiscal 2024 (ended June 30, 2024), Super Micro Computer delivered close to $15 billion in sales, which represented a 110% jump from the prior-year period. Based on the midpoint of its fiscal 2025 guidance from mid-February, it's on track to generate about $24.3 billion in full-year sales. This is a jaw-dropping growth rate that demonstrates just how aggressively businesses are spending on AI-data center infrastructure in order to gain first-mover advantages within their respective industries.
NASDAQ: SMCI
Key Data Points
Supermicro's valuation is also quite the dangling carrot. Shares are valued at just 11 times forecast EPS for fiscal 2026, which is an absurdly inexpensive multiple for a company expected to deliver roughly 60% sales growth this fiscal year and follow it up with 40% revenue growth next year.
Despite this seemingly ideal positioning, Supermicro is quite the controversial AI stock-split stock.
It began last August, with noted short-seller Hindenburg Research alleging "accounting manipulation" at Super Micro Computer. This was followed up by the company delaying the filing of its annual and first-quarter reports, as well as the resignation of its previous accounting firm, Ernst & Young.
The silver lining for Supermicro is that it's been able to file its delayed reports, has hired a new auditor, and an independent committee didn't find any evidence of wrongdoing. Nevertheless, what trust investors had in the company will clearly need to be rebuilt over time. Even with its shares trading at an incredibly cheap forward price-to-earnings multiple, this is a company with a lot to prove to Wall Street in the coming quarters.
