Institutional Conviction: Why Nepsis Is Betting Big on CAVA's Long-Term Potential

CAVA Group has attracted significant institutional interest recently, with Minnesota-based investment firm Nepsis expanding its stake in the Mediterranean fast-casual restaurant operator. This move signals growing confidence in the company’s growth trajectory despite recent stock price headwinds.

The Investment Move: Details and Context

In a January 14, 2026, Securities and Exchange Commission filing, Nepsis Inc. disclosed that it acquired 52,776 additional CAVA shares, valued at approximately $2.94 million based on fourth-quarter 2025 average closing prices. This purchase reflects a calculated bet on the company’s ability to execute its ambitious expansion strategy.

Following the transaction, Nepsis’s total position in CAVA reached 176,694 shares, now representing 3.2% of the fund’s 13F reportable assets under management as of December 31, 2025. While this holding doesn’t crack the fund’s top five positions—which include holdings in UTHR ($21.32 million), RLI ($18.50 million), DVN ($17.12 million), CB ($16.83 million), and AMD ($16.64 million)—the CAVA position grew by $2.88 million in value from the previous quarter, combining both new purchases and favorable market movement.

CAVA’s Business Model and Market Position

CAVA operates as a vertically integrated Mediterranean-focused restaurant company with a dual revenue stream: company-operated locations and branded product distribution through retail grocery channels. This multi-channel approach differentiates the company within the competitive fast-casual restaurant landscape.

The company’s market fundamentals are substantial: as of January 2026, CAVA boasts a market capitalization of $7.89 billion, trailing twelve-month revenue of $1.13 billion, and net income of $137.44 million. On January 13, 2026, shares closed at $68.52, though the stock has faced significant pressure, declining 38.3% over the past year and trailing the S&P 500 by 57.61 percentage points.

The Growth Story That’s Driving Institutional Interest

Despite near-term stock weakness, the fundamental narrative remains compelling. CAVA is in aggressive expansion mode, targeting more than 1,000 restaurant locations by 2032—a dramatic increase from approximately 450 units currently. This expansion strategy positions the company to capitalize on sustained consumer demand for healthy, customizable dining options.

Recent menu innovations have garnered positive reception from sell-side analysts, suggesting management is executing on product development. For growth-oriented investors, the company’s trajectory matters more than current valuation metrics.

Valuation Reality Check

CAVA commands a forward price-to-earnings ratio of 124x, a substantial premium that reflects aggressive growth expectations. While this valuation has moderated considerably from its one-year peak of 240x, it remains elevated in absolute terms. This places CAVA squarely in the category of high-conviction growth stocks—suitable only for investors with substantial risk tolerance and multi-year investment horizons.

The stock’s performance gap relative to the S&P 500 has been severe, but institutional investors like Nepsis appear to view current valuations and recent weakness as a potential entry point rather than a warning sign. Their capital deployment suggests confidence that the company’s long-term expansion narrative will ultimately validate today’s premium multiple.

What This Means for Investors

Institutional accumulation often precedes retail recognition. Nepsis’s decision to add shares despite CAVA’s recent underperformance suggests sophisticated investors see value in the company’s 1,000-location ambition and multi-channel revenue model. However, investors must acknowledge the binary nature of this opportunity: successful execution of the expansion plan could drive substantial returns, while any shortfall could result in significant downside.

For those aligned with CAVA’s growth thesis, the company’s expansion roadmap and menu evolution warrant close monitoring over the coming years.