How Big Mac’s Mistake Could’ve Made You 2,700%
They did an outstanding job.
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…
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.
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.
But wanting to focus on a core business is just one reason that companies do spinoffs.
I’ll share with you the other reasons over the next few days and how investors can profit from them.
Founder, Alpha Investor