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Losing Dinner

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July 20, 2010 – Comments (12) | RELATED TICKERS: RRGB , CMG

 

No, I don't mean the title of this blog post in the way you are probably thinking -- I'm not feeling ill, my stomach is not upset.

But, it's looking more and more like I'm losing a dinner bet.

For those of you who may not have followed my CAPS project from a while back, in 2007 I launched a stock-picking blog called Eldrehad's Picks in which I built a long-only porfolio in CAPS with detailed write-ups for each month's pick.  Other priorites surfaced in my life so I let the blog go dormant, but over all, I'm pleased with the performance (and learned a lot from the exercise).  If you're interested, the link is below, but of course all of the analysis is a bit dated by now.

http://caps.fool.com/player/eldrehadspicks.aspx

What does this have to do with losing dinner?

Well, my inaugural pick for this blog was Red Robin Gourmet Burgers (RRGB).  A pick which immediately garnered a fair amount of criticism (deservedly so) from a few of my fellow Fools.  The most vocal of my critics was TMFBent, who voiced his concerns with my pick in his blog.

http://caps.fool.com/Blogs/why-i-think-rrgb-is-a/14597

At that time, Seth (TMFBent) was long on Chipotle Mexican Grill (specifically the class B shares), while I was a Chipotle skeptic (thinking the valuation at the time far too rich).  So, we bet dinner -- a three year race between Red Robin and Chipotle (per comments on Seth's blog below).

Seth:

I can bet dinner, but this is a better bet, IMO. 3 years, CMG.b against RRGB, winner eats free at the restaurant of his choice.

(One year is just noise...) 

Yours truly:

Not beat Chipotle in a milion years?  Pretty strong words my friend - you're on!  I think Chipotle's multiple is wickedly rich.

So, use last night's close as the starting point?  CMG-B at $91.82 vs. RRGB at $39,14, for three years (close as of 8/21/10)?

Looking forward to the race!

Now, I don't know if Seth (or anyone else anywhere in CAPS) remembers that little bet, but I do.  How's it going so far?  Well, as you can probably tell from the blog title, not so well for me.  Last December, the CMG-B shares were retired and exchanged for the class A shares on a one-for-one basis -- and currently trade for $133.97 per stub.  I didn't look into dividends, but there haven't been any splits, so a 46% gain for Seth in three years (not bad considering the downturn that's happened in the market since).  RRGB, on the other hand, is currently trading for $20.66 per stub, so a 47% loss for yours truly.  Ouch!

Unless Red Robin goes on an absolute tear, or Chipotle completely implodes, or a combination of both (which need to happen in the next month -- unlikely), the handwriting is on the wall.

I lost.

And I don't mind.

The fact is, this is the kind of thing that CAPS is all about.  No, not making dinner bets, but having intelligent people voice their opinions on stocks and investments, being accountable for their picks, and learning from each other -- and I've learned an awful lot from Seth along the way -- the value of which far exeeds the cost of a meal.

As I write this, I am remembering how it felt back then -- my first pick drawing a bit of fire from one of the Fools I admired most in CAPS.  It was a little tough to swallow, seeing as this was a new endeavor for me (posting picks with detailed blog write-ups in this fashion).  One thing I did endeavor to do, however, was to be a bit more selective in the picks that followed -- something which I think paid of handsomely in both the performance of the picks and how much I personally learned as an investor in the process.

So...  I lost dinner, or am about to -- but I gained so much, from not only that exchange with Seth, but from CAPS as a whole.  Maybe one of these days I'll reopen Eldrehad's Picks (I gave it a shot about a year ago, but other priorities got in my way again), but even if I don't, I am a far richer person for having done it.

So, Seth, if you happen to stumble onto my blog, I haven't forgotten -- and when the 21st of August rolls around, I'll shoot you an e-mail to make arrangements to send a Chipotle Mexican Grill gift card your way.  Thank you for everything I have learned from you over the years.

Regards,

Russell (a.k.a. TMFEldrehad)

P.S.  I own no shares in either CMG or RRGB

12 Comments – Post Your Own

#1) On July 20, 2010 at 8:38 PM, Imperial1964 (97.93) wrote:

I know this is a ways off-topic, but you brought up Eldrehad's picks and stocks you believed in that have lost money, do you still have an opinion on BOLT?

I first ran across BOLT on your CAPS page.

I've owned the stock since the end of '08, having bought some more recently.  I believe in the company, but there have been some unfortunate events that have impacted its business.  However, the stock looks cheap by my measure.

I've tried to page through your picks to look for it to see if you've updated/ended your pick, but unfortunately there isn't a way I've found to search someone's picks and you have an awful lot of picks.

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#2) On July 20, 2010 at 8:51 PM, goalie37 (94.46) wrote:

I would also like to thank you, Russell.  I have learned so much from the CAPS players, due to the work (for free) that people like you have brought to our community.

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#3) On July 20, 2010 at 10:47 PM, TMFJake (76.05) wrote:

Oh, I remember the bet. :)  You overall performane has been great however.  Well done Eldrehad!!

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#4) On July 21, 2010 at 5:37 AM, TMFBent (99.83) wrote:

Ha! I had totally forgotten, my friend. Funny, I ate at a RRGB not long ago after my wife ran the Baltimore half marathon. Our baby threw food all over the place. I liked it, but now that I think about it, it's clear why CMG won out here.

RRGB has a nice big menu, but it's not really much different from a Chili's or any other full service place. Chipotle, with its ruthless drive to stay simple and leverage those 10 ingredients, is like a fine-tuned, money-making machine. Both give tasty food, but one is constantly striving to do that with greater frequency per square foot.

I'm on vacation for a while starting tomorrow. I'd try and let  you off the hook but I'm also betting your the kind of guy who won't go for that. So If we get a chance to stop at a Chipotle, I'll send you a receipt later.

Has it really been 3 years already?

Sj

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#5) On July 21, 2010 at 5:38 AM, TMFBent (99.83) wrote:

Or, I'll wait for that gift card!

Sj

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#6) On July 21, 2010 at 10:19 AM, TMFEldrehad (99.99) wrote:

Hey Seth.

You are absolutely right, I am not the kind of guy to allow you to let me off the hook.  Send me an e-mail and let me know where to send the gift card.

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#7) On July 21, 2010 at 5:47 PM, EnigmaDude (98.06) wrote:

Great post!  I'm afraid I would have gone with Chipotle too if I had been around on CAPS back then. 

Oh wait - I was.  But I was too new to have an opinion and generally don't like restaurant stocks of any flavor.  I do like the gentlemen's wager!  And I too, have learned much from both of you.

So - are you going to get back to Eldrehad's Picks??  I wish you would.

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#8) On August 04, 2010 at 2:40 PM, ikkyu2 (99.38) wrote:

I remember the bet.  Wasn't that long after your unequaled reign as Top Fool.  I remember thinking at the time that you were wrong, but you were wrong in a very educated and instructive way - your analysis made it very easy to see how and why one could disagree with you.

I still use something very similar to your method and approach for looking at the fundamentals of certain kinds of stocks.  Allowed me to catch nice runs in both CMG and DPZ.  I'd sure like to have more of your picks and analyses to follow, especially in different sectors.

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#9) On August 13, 2010 at 11:48 PM, TMFEldrehad (99.99) wrote:

I remember thinking at the time that you were wrong, but you were wrong in a very educated and instructive way - your analysis made it very easy to see how and why one could disagree with you.

Thanks!

Really...  the one thing I strove to try to do in that blog was not only point out why I thought the candidate was a good one, but also be very honest and forthright about any 'warts' it might have.

It pleases me greatly to find out that, with regard to at least one fellow Fool, my approach worked as I had hoped.

Thanks again for the kind words.

-Russell

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#10) On December 14, 2010 at 4:36 PM, blackeye101 (56.23) wrote:

TMFElrehad, 

 Quick question.  I noticed you bet all sorts of ultra short ETFs would  under preform the market yesterday the 13th near the 52 weeks highs.  I am curious as to your reasoning for this.  Care to share a brief summary?

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#11) On December 14, 2010 at 4:36 PM, blackeye101 (56.23) wrote:

TMFElrehad, 

 Quick question.  I noticed you bet all sorts of ultra short ETFs would  under preform the market yesterday the 13th near the 52 weeks highs.  I am curious as to your reasoning for this.  Care to share a brief summary?

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#12) On February 16, 2011 at 11:25 PM, GreenCollegeGrad (78.15) wrote:

Lets face it, while CAPS is amazing and keeps us sharp, in the end there is no payout, no ultimate payoff for our due dilligence,

What I propose is for players ranked 90 and above to have our own daily chat on specific stocks and overall market trends for all players to see.  Because in the end I know I use the the baseline data I recieve not only from my picks but other respected players to make educated and informed decisions on investing real money in the the market.

 In the end this isnt player vs player, lets be honest, who the hell cares whos number one.  But if we can use each other as a sounding board, and educate those newer cap members into making smarter decisions, then we have acomplished what I believe this site was created for. Starting Feb 17 on my blog (and daily there after) I will have a post which I hope all 90+ caps member will contribute to. Either way I will provide analysis on a few stocks and my overall take on the market.

 Lets embrace this opportunity we have to reach out to other intelligent investors and and actually turns this opportunity into a tangible reward.

Again, tomorrow, Thursday the 17, the first " Collaboration of the Caps" will begin. I hope to see you 90+'s there, and those who are close working hard to get into that range so you can contribute.

GreenCollegeGrad

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