Have Insiders Sold Chipotle Mexican Grill, Inc. (NYSE:CMG) Shares Recently?

By
Simply Wall St
Published
July 25, 2021
NYSE:CMG
Source: Shutterstock

Some Chipotle Mexican Grill, Inc. (NYSE:CMG) shareholders may be a little concerned to see that the Independent Director, Albert Baldocchi, recently sold a substantial US$4.9m worth of stock at a price of US$1,778 per share. However, that sale only accounted for 3.9% of their holding, so arguably it doesn't say much about their conviction.

See our latest analysis for Chipotle Mexican Grill

Chipotle Mexican Grill Insider Transactions Over The Last Year

The Independent Director, Neil Flanzraich, made the biggest insider sale in the last 12 months. That single transaction was for US$6.8m worth of shares at a price of US$1,451 each. That means that even when the share price was below the current price of US$1,831, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was 100% of Neil Flanzraich's stake.

Over the last year, we can see that insiders have bought 903.00 shares worth US$1.3m. But they sold 9.82k shares for US$16m. In total, Chipotle Mexican Grill insiders sold more than they bought over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
NYSE:CMG Insider Trading Volume July 25th 2021

I will like Chipotle Mexican Grill better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Chipotle Mexican Grill insiders own about US$770m worth of shares (which is 1.5% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Chipotle Mexican Grill Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. Zooming out, the longer term picture doesn't give us much comfort. But it is good to see that Chipotle Mexican Grill is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 2 warning signs with Chipotle Mexican Grill and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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