{"id":3260,"date":"2009-05-08T11:17:59","date_gmt":"2009-05-08T15:17:59","guid":{"rendered":"http:\/\/www.thedisciplinedinvestor.com\/blog\/?p=3260"},"modified":"2016-09-20T17:18:55","modified_gmt":"2016-09-20T21:18:55","slug":"spread-arbitrage-chipotle-mexican-grill","status":"publish","type":"post","link":"https:\/\/thedisciplinedinvestor.com\/blog\/2009\/05\/08\/spread-arbitrage-chipotle-mexican-grill\/","title":{"rendered":"Spread Arbitrage:  Chipotle Mexican Grill"},"content":{"rendered":"<p>On the heels of a few trading publications we saw the opportunity to take advantage of the spread differential between the Chipotle Mexican Grill (CMG) B Shares and the Chipotle Mexican Grill A shares.  The A &amp; B shares are fairly identical with the B shares carrying more voting rights but also contain less liquidity.  Institutional players have shied away from the B shares due to this liquidity problem and the fear of moving the market dramatically.  Thus, the B shares have typically lagged the A shares when the stock has made extreme movements.<\/p>\n<p><!--more-->In the chart below, you will see in the bottom right hand corner the occurrences distribution.  The distribution spans from 0% to 30% premium and historically we have seen the A shares trade at a premium of 11% to the B shares.  We will be looking for this trade to move back toward normal distribution as we picked up the trade at an approximately 22% spread premium.<\/p>\n<p>(<em>Click Chart for Larger View)<\/em><\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2009\/05\/sg2009050543149.gif\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-3266\" title=\"chipotle\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2009\/05\/chipotle-1.gif\" alt=\"chipotle\" width=\"548\" height=\"392\" \/><br \/>\n<\/a><\/p>\n<p>Fundamentally the liquidity has made the B shares much more attractive than the A shares.  Cash flow per share is almost identical, Book Value on the B shares are trading at 3.53X vs. 4.24X on the A shares and the P\/E ratio is trading at 28 on the B shares vs. 31 on the A shares.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>On the heels of a few trading publications we saw the opportunity to take advantage of the spread differential between the Chipotle Mexican Grill (CMG) B Shares and the Chipotle Mexican Grill A shares. The A &amp; B shares are fairly identical with the B shares carrying more voting rights but also contain less liquidity. [&hellip;]<\/p>\n","protected":false},"author":371,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[224,21,253],"tags":[494,486,244],"class_list":["post-3260","post","type-post","status-publish","format-standard","hentry","category-long-ideas","category-short-ideas","category-strategy","tag-long-ideas","tag-short-ideas","tag-strategy-lab","et-doesnt-have-format-content","et_post_format-et-post-format-standard"],"acf":[],"_links":{"self":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/3260","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/users\/371"}],"replies":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/comments?post=3260"}],"version-history":[{"count":0,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/3260\/revisions"}],"wp:attachment":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/media?parent=3260"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/categories?post=3260"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/tags?post=3260"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}