Starbucks received significant attention last week for its illegal hunting of Chipotle Mexican Grill is a popular fast-casual restaurant chain known for its customizable burritos, bowls, and tacos. The renowned CEO Brian Niccol caused Starbucks’ stock to surge by over 20% following the announcement, providing a much-needed boost to the coffee giant.
Investors trust Niccol’s capability to lead Starbucks towards growth, but it may be too early to tell. He is not assuming his role until September, and it will likely require a few quarters before any outcomes from his proposed changes are seen.
However, there is a different coffee company that has been attracting interest from wealthy investors, and that is a recently established stock. Dutch Bros ( BROS 0.99% ) Let’s find out who is making the purchase and whether you should consider following their example.
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Wealthy individuals are investing in inexpensive coffee.
Asset management companies that possess a minimum of $100 million in assets are required. submitting a 13F filing Billionaire investors submit quarterly reports to the Securities and Exchange Commission (SEC) disclosing their trades. Investors closely monitor these reports to track the investment decisions of wealthy individuals. The recent release of Warren Buffett’s 13F filing has garnered significant attention in the media.
However, there are numerous billionaire-led companies that attract significant attention, and a few well-known ones have recently invested in Dutch Bros stock. Some of these companies are:
- Larry Fink of Blackrock : The position grew by 177%.
- Steven A. Cohen from Point72 Asset Management has upped his stake by 90%.
- Paul Tudor Jones, from Tudor Investments, raised his position by 82%.
- Steven Schonfeld from Schonfeld Strategic Advisors: opened a new investment position.
It’s not only the coffee that is warm.
Dutch Bros is a coffee chain that stands out for its exciting and unique qualities. Despite its Dutch-inspired name, it offers a modern twist on the traditional American coffee shop experience, creating a warm and welcoming atmosphere. The company prioritizes a friendly and community-focused culture, providing fast and customer-centric service. In contrast to Starbucks’ upscale and metropolitan ambiance, Dutch Bros offers a more down-to-earth and locally-rooted vibe. This approach has attracted a large following of Americans who live near a Dutch Bros location and appreciate its distinct charm.
A crucial element for a successful business is having a popular product, which Dutch Bros has. Additionally, it requires a competent management team to expand the business, and following its successful start under the leadership of its founders, Dutch Bros has now brought in a fresh executive team to grow further.
Everything is going well up to this point. In the second quarter of 2024, revenue went up by 30% compared to the previous year, mainly due to the expansion of new stores and a 4.1% rise in Sales from the same store or location. The profit margin from the company-operated shops has increased by 0.5 points compared to last year, reaching 30.8%.
In the previous year, the company experienced fluctuations between incurring losses and generating profits, but the second quarter marked the second consecutive period of positive net income, which rose from $9.7 million to $22.2 million.
Close, yet imperfect
Dutch Bros has faced some challenges, operating in a potentially unstable market. One advantage it holds over Starbucks is its lower pricing, which may attract customers looking to save on their coffee purchases. However, in times of economic caution, consumers may reconsider the necessity of indulging in personalized drinks altogether.
Dutch Bros is gaining an advantage from rapidly opening new stores, allowing it to include these new locations in its revenue growth. While the growth of existing stores has decreased, it is still an improvement compared to the previous year. The company is performing relatively well despite facing challenges from external factors, making it challenging to distinguish between the company’s performance and external influences.
Yes, I would definitely go to Dutch Bros with the billionaires.
I frequently emphasize to investors that billionaire asset managers handle investments worth billions of dollars for their hedge funds, and their trading decisions reflect this scale. They aim to optimize immediate profits as a key aspect of their job, which sets their approaches apart from those of typical individual investors.
Nevertheless, Dutch Bros seems to present an attractive opportunity for regular investors in the long run. Despite a drop in its value due to short-term concerns about restaurant spending, several billionaires acquired Dutch Bros shares in the first quarter. It is possible that these investors are taking advantage of the recent lower price to increase their holdings, and those willing to take on some risk may find it acceptable to follow suit and invest in Dutch Bros stock for the long term.
