With an $85,000 loan from his father, Steve Ells got to work.
He only needed to sell 107 burritos a day to break even — but within weeks, he far surpassed that goal.
In just a month, the store was selling over 1,000 burritos per day.
What began as a dream of a fine-dining restaurant turned into the start of Chipotle Mexican Grill.
When McDonald’s took an interest in Chipotle, it only had 16 stores in Denver.
Eight years later, McDonald’s helped Chipotle grow to 500 stores across the U.S.
Then, management made a fateful decision.
It’s still a sore subject after more than 15 years.
McDonald’s decided to focus on hamburgers instead of burritos…
Big Blunder
That’s the reason the company gave to shareholders when it spun off Chipotle.
And on October 5, 2006, McDonald’s shareholders automatically received shares of Chipotle in their brokerage accounts.
It’s a date that McDonald’s management would rather forget.
Because over the next decade, Chipotle shares soared. They’re now up more than 2,700%.
And today, even the mention of Chipotle gives McDonald’s executives indigestion.
Today, there are over 3,400 Chipotle locations across the country, and Steve Ells’ net worth has reached $1.7 billion.
But it’s a great example of how spinoffs create amazing opportunities for investors — if you know what to look for.
Wall Street’s Glitch
Spinoffs — like Chipotle’s — are often underpriced.
And that’s because of a glitch in the way Wall Street distributes the shares.
In fact, it puts big Wall Street institutions at a disadvantage.
However, for Main Street investors like you and me, the odds are in our favor.
Imagine logging into your investment account to discover that hundreds of shares of brand-new stock have been deposited overnight into your portfolio.
Every year, billions of dollars worth of shares of new stock in brand-new companies are distributed to investors just like you.
I call these company spinoff shares “pre-market stocks.”
All you have to do is own shares of the original company by a certain date.
And when the pre-market stock is distributed…
The new shares are yours, free and clear … and tax-free.
One study from Penn State tracked shares offered as pre-market stocks over a twenty-five-year period ending in 1988.
They found that these stocks consistently outperformed their industry peers … AND the S&P 500.
Purdue University ran a study over an even longer period…
And they proved that pre-market stocks consistently beat the stock market over 49 years.
Do you want to know more about pre-market stocks?
If so, I’ll share more plus my top recommendations soon. Just let me know if you’re interested by clicking here.
Regards,
Charles Mizrahi
Founder, Alpha Investor
