As I write this blog post, Chipotle (NYSE: CMG) is down 5 percent form yesterday’s close and over 13 percent from the high of around $500.

What is happening here? The whole thing is rather baffling because last quarter was pretty good, and no major developments have been reported since. But that seems to be exactly the problem. Apparently many “investors” were hoping for a fast recovery so they could make a lot of money quickly. Indeed, it appears that many of them decided to take profits after the stock’s strong performance this year.

So when Chipotle announced yesterday that it essentially had nothing new to report, short-term speculators sold off under the belief that they would not be able to make money as quickly as they had hoped. As a long term investor, I cheer this development. Shares are now just a shade above my highest purchase price from back in March, so I can add to my position now without substantially increasing my average per-share cost basis of $413.

I have written extensively about Chipotle’s growth potential over the next ten years, and I still believe that the food safety scandal presents new investors with a rare opportunity to purchase shares well below fair value. SA user Charlie Stenton said it best in a comment on a recent Chipotle article.

charlie stenton quote

Disclosure: I am long CMG.