FOLLOW THE MONEY – FEBRUARY 15, 2026

The prices of gold and silver have taken a well-earned rest during the last month, which we believe represents just a consolidation within an ongoing long term bull market. One justification has been the pending appointment of Kevin Warsh to the Chairmanship of the Federal Reserve. While Warsh might be “hawkish” in comparison to Jerome Powell, Treasury Secretary Bessent, who has worked extensively with Warsh, has already suggested that any reduction of the Fed balance sheet will be cautiously imposed over extended time. For one thing, there is approximately $10 trillion of US government debt that must be refinanced within the next twelve months, so any serious reduction of the Fed’s $6 trillion balance sheet would burden the debt market even further. Let’s not forget that President Trump clearly wants lower rates and easy money, and mid-term elections will not go well for Trump & Co. if the stock market and/or the economy are stumbling. However the current can is kicked down the road, the basic problems remain. The privilege that the US has enjoyed in terms of the US Dollar being the world’s primary trading currency is clearly being eroded, and that process continues. We have no doubt that Kevin Warsh strongly believes that the Fed’s money printing has been undesirable, and will do his best to prevent further Fed balance sheet expansion and currency dilution. Balancing that inclination, however, and hawkish as he may be philosophically, he was instrumental in the ’08-’09 bailout process, caving to necessity. Nothing, therefore, has really changed. The debt and deficits remain and there is no political will to “take away the punchbowl”, even in “the best economy ever”.

Among the investing/trading lessons learned within my multi-decade investing career: It is normally a mistake to believe you can “support” a market.  Michael Saylor’s “Strategy” (MSTR) was $200/share on November 15^th (down from 425 on July 15^th), when we described here how the valuation premium (relative to the Company’s $50B worth of Bitcoin) was shrinking (to 20%, down from 90%). That ridiculous premium allowed MSTR to sell stock to buy Bitcoin, increasing the number of Bitcoins per share. That magic trick (allowed by the speculative fervor over Bitcoin and its derivatives) has evaporated since MSTR (at about $125) sells at a discount from the value of its Bitcoin, so the same “strategy” is dilutive. Saylor, however, said on February 9^th that he plans to buy Bitcoin “every quarter forever”. Unfortunately, though, no matter how high MSTR goes, the current dilution currently imposed will remain. Moreover, If Saylor believes that his purchases will support the price of Bitcoin, he has yet to learn that an “unnatural” bid in any market will not hold up unless the buyer is prepared to buy it all. Strategy currently owns about 3% of all the Bitcoin, and it will require over a trillion dollars of MSTR sales to buy the rest.

Chipotle’s annual results, reported last week, provided confirmation, as if we needed it, that even “best of breed” restaurant operators are  currently challenged. After another admirable year in calendar ’24, with comps up 7.4%, transactions up 4.3% and Adjusted Net Income up 24%, CMG management guided (for ’25) to low to mid-single-digit comp sales. In ’25, however: Comp sales were down 2.5% in Q4 and 1.7% for the year. Restaurant level operating margin was down 140 bp in Q4 and down 130 bp for the year. Transactions for the year were down by 2.9%. Net income after taxes (with virtually the same tax rate) was flat at $1.54B or $1.14 per diluted share. The Company remains debt free, holding $350M in cash, even after opening 304 and 334 stores in ’25 and ’26 respectively, and buying back $569M and $2.4B worth of shares (at $57.21) and (at $42.54) in ’24 and ’25 respectively. For ’26: 350-370 new locations are planned and $1.7B of additional stock buyback is authorized. At this juncture, management, which has traditionally refrained from operating line guidance, anticipates comp sales to be about flat. Management of course acknowledges that there is work to be done if previous momentum is to be regained. Their “Recipe for Growth” is a nice catch phrase, but specifics (for public view, at least) are lacking. The five key areas (abbreviated here) are: Strengthen the core with operational and culinary excellence. Evolve brand messaging and menu innovation and new occasions. Modernize with technology and AI and relaunching Rewards. Expand global reach by scaling with intention. Cultivate the best talent that is energized and focused. These objectives are not unique to Chipotle, so hopefully there is some unstated magic beneath the surface. With 20-20 hindsight, perhaps $3B of stock buybacks over the last 2 years, at 30-40x trailing EBITDA, was not a necessity. Considering that over 600 /stores have been opened in the last twenty-four months, flat earnings in ‘25 imply some serious slippage somewhere. With CMG trading at over 20x trailing twelve-month EBITDA and over 30x TTM EPS, the above concerns may have contributed to Bill Ackman’s Pershing Capital liquidation of their remaining shares.

Roger Lipton