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Chipotle Mexican Grill, Inc. Message Board

  • emildebois emildebois Nov 21, 2012 1:24 AM Flag

    The bottom line withthe buyback is ..

    .. that the company has a lot of cash which they use as a strong card to play a calculated risk. If it works (to push the prices up) great. If not, they can afford it because of their fat bank account. The latter, IMHO, will be the case here. They did it just because they thought they could play House. It's only a desperate act and not gonna work. The price for cmg is around 200 if not lower.

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    • BUYBACK is use to cover up weak ratios or poorly managed employee stock option plans. cmg certainly takes the prize for this "poorly managed employee stock option plans."
      look how much steve ells profited by stock options. the guy does not keep the shares but sell them as soon as he gets them.

      ELLS STEVE: Declared Holdings
      Company/Relationship Reported Shares Ownership
      Chipotle Mexican Grill, Inc. Co
      (historical quotes, profile, other insiders) 14-Mar-12 246,802 Direct

      Insider & restricted shareholder transactions reported over the last two years
      Date Shares Stock Transaction AdChoices

      14-Mar-12 14,811 CMG Automatic Sale at $398.25 - $401.22 per share.
      (Proceeds of about $5,920,000)
      13-Mar-12 20,000 CMG Option Exercise at $103.79 per share.
      (Cost of $2,075,800)
      13-Mar-12 5,189 CMG Automatic Sale at $400.05 per share.
      (Proceeds of $2,075,859)
      9-Mar-12 18,483 CMG Automatic Sale at $396.66 - $399.65 per share.
      (Proceeds of about $7,359,000)
      8-Mar-12 25,000 CMG Option Exercise at $103.79 per share.
      (Cost of $2,594,750)
      8-Mar-12 6,517 CMG Automatic Sale at $398.18 per share.
      (Proceeds of $2,594,939)
      2-Mar-12 14,732 CMG Automatic Sale at $392.73 - $393.15 per share.
      (Proceeds of about $5,789,000)
      1-Mar-12 20,000 CMG Option Exercise at $103.79 per share.
      (Cost of $2,075,800)
      1-Mar-12 5,268 CMG Automatic Sale at $394.10 per share.
      (Proceeds of $2,076,118)
      29-Feb-12 7,352 CMG Automatic Sale at $388.06 - $391.09 per share.
      (Proceeds of about $2,864,000)
      28-Feb-12 15,589 CMG Automatic Sale at $388.07 - $391.96 per share.
      (Proceeds of about $6,080,000)
      28-Feb-12 10,000 CMG Option Exercise at $103.79 per share.
      (Cost of $1,037,900)
      27-Feb-12 2,059 CMG Automatic Sale at $388.89 per share.
      (Proceeds of $800,724)
      27-Feb-12 15,000 CMG Option Exercise at $53.36 per share.
      (Cost of $800,400)
      24-Feb-12 8,620 CMG Automatic Sale at $385.06 - $386.99 per share.
      (Proceeds of about $3,328,000)
      23-Feb-12 1,380 CMG Automatic Sale at $386.80 per share.
      (Proceeds of $533,784)
      23-Feb-12 10,000 CMG Option Exercise at $53.36 per share.
      (Cost of $533,600)
      21-Feb-12 43,064 CMG Automatic Sale at $380.15 - $384.3 per share.
      (Proceeds of about $16,460,000)
      17-Feb-12 50,000 CMG Option Exercise at $53.36 per share.
      (Cost of $2,668,000)
      17-Feb-12 6,936 CMG Automatic Sale at $384.70 per share.
      (Proceeds of $2,668,279)
      1-Jul-11 50,000 CMG Automatic Sale at $306.43 - $308.19 per share.
      (Proceeds of about $15,366,000)
      30-Jun-11 50,000 CMG Option Exercise at $53.36 per share.
      (Cost of $2,668,000)
      28-Jun-11 70,500 CMG Option Exercise at $53.36 - $102.65 per share.
      28-Jun-11 70,500 CMG Automatic Sale at $301.46 - $304.73 per share.
      (Proceeds of about $21,368,000)
      27-May-11 28,579 CMG Automatic Sale at $288.78 - $293.79 per share.
      (Proceeds of about $8,325,000)
      26-May-11 35,000 CMG Option Exercise at $53.36 per share.
      (Cost of $1,867,600)
      26-May-11 6,421 CMG Automatic Sale at $290.88 per share.
      (Proceeds of $1,867,740)
      16-May-11 8,097 CMG Automatic Sale at $277 per share.
      (Proceeds of $2,242,869)
      13-May-11 10,000 CMG Option Exercise at $53.36 per share.
      (Cost of $533,600)
      13-May-11 1,903 CMG Automatic Sale at $280.40 per share.
      (Proceeds of $533,601)

    • Sadly, we agree. Amazed they have spent $40mil since earnings through Monday, then they added another $25 mil buying directly from $MS (who clearly have been selling hard.) The institutional guys are exiting and $CMG is trying to cover their rear.

      Now in a Sym Tri intraday, which is getting very toppy and looking like it will breakdown. Will the buyback save it? If not that is a very very bad sign.. if you are still long. A PM move below $273 is begging to be sold.

    • This simple fable describes the buyback fraud in plain language:


      Mr. Simple & Mr. Sharp

      A Fable

      Once upon a time, there was an investor, Mr. Simple, who owned all the common stock of Simple Company and who planned to retire in thirty years.

      Mr. Simple owned all the stock in Simple Company.

      Simple Company's only asset was a one million dollar, thirty-year tax-exempt, investment grade bond, with a seven percent coupon.

      Because of this bond, Simple Company had tax-free profits of seventy thousand dollars each year.

      Simple Company paid no dividends and retained profits in a non-interest-paying bank account.

      Mr. Simple, the sole investor, planned to liquidate Simple Company after thirty years to get cash for retirement.

      He expected that his net worth after thirty years would be three million one hundred thousand dollars.

      Simple Company had only one director, Mr. Sharp, who served with no pay.

      One day, Mr. Sharp came to Mr. Simple and said,

      'I am a clever man.

      I know how to make the value of Simple Company increase on the stock exchange.

      This will make you very rich.

      Everyone will speak well of Simple Company and your friends will see what a smart investor you are.'

      Director Sharp was going to make Mr. Simple very rich.

      'All I ask is for you to let me share a little of your new riches.

      Just give me a few stock options each year, as my only remuneration and I will be happy.

      Also, I will only get paid in proportion to the new wealth I bring you.

      What could be fairer than that?'

      'Besides, I promise you that each year our auditors will give you a report showing that the income of Simple Company continues to be seventy thousand dollars.

      Even better, so as not to dilute your ownership in Simple Company, each year the company will buy back all the stock that has been issued as options.'

      Mr. Simple thought this was a good idea and that he had nothing to lose.

      After all, Simple Company would continue to earn seventy thousand dollars each year and Mr. Sharp deserved a bonus if he could make Simple Company more valuable.

      And so, the plan was put into action.

      Each year, Mr. Sharp was issued some options on Simple Company stock. Each year, the auditor's report showed that Simple Company earned seventy thousand dollars.

      Each year the market value of simple company increased – sometimes ten percent, sometimes thirty percent – so the investor could easily see that he was becoming richer.

      After twenty-nine years, the market value of Simple Company reached three hundred ten million dollars – and Mr. Simple was one hundred times more affluent that he had expected to be at this time of life.

      He was one of the richest men in Simple Town.

      Because of his vast wealth, he felt he could prudently spend all of his other income.

      Mr. Simple borrowed on his paper profits to build a mansion.

      Simple Town bankers were impressed by his personal balance sheet and lent him twenty million dollar on his note to build a luxurious mansion.

      Then Mr. Sharp retired.

      Each year he had earned seventy thousand dollars on his stock options, which he had deposited at No-Interest Bank.

      He now had over two million dollars saved.

      Mr. Simple was happy that Mr. Sharp had been able to accumulate a nest egg – after all, he deserved it and it was less than one percent of the great wealth that Mr. Sharp had earned for him.

      Mr. Simple gave Mr. Sharp a gold watch, a handshake, and waved good-bye as he left by plane for retirement in Tahiti.

      Mr. Sharp waved goodbye as he sailed for Tahiti.

      After Mr. Sharp was gone, some strange things began to happen.

      First, there was no more trading of Simple Company on the exchange.

      The stock was not delisted – there were just no buyers or sellers now that Mr. Sharp had left town.

      After six months, the Simple Town banker who had lent him twenty million dollars came to Mr. Simple and said that he would need to get the stock of Simple Company appraised, to renew the loan.

      An appraiser studied the balance sheet of Simple Company, and said:

      'Simple Company is worth one million dollars. The only asset is a one million dollar bond that comes due next year.'

      'But I don't understand,' said Mr. Simple,

      'Every year for almost three decades the company has shown a profit of seventy thousand dollars.

      I have audited statements to prove it. There have been no expenses. We should have over two million dollars in the bank.'

      The appraiser responded:

      'It is true that every year Simple Company showed a profit of seventy thousand dollars, and this was reported under General Accepted Accounting Practices.'

      The appraiser had some bad news for Mr. Simple.

      'However, each year this seventy thousand dollars has been used to repurchase Simple Company stock on the exchange.

      Accountants and the SEC do not consider this to be a cost, but only a charge to capital accounts.'

      'But the company cannot be worth only one million dollars,' exclaimed the investor.

      'Just six months ago, the company had a market capitalization of three hundred ten million dollars.

      A famous professor told me that market value is the same as intrinsic value.'

      The appraiser answered, sadly:

      'Perhaps the professor will pay you three hundred ten million dollars for Simple Company, but I must report to the bank that the company is only worth one million dollars.'

      A few days later, the Simple Town banker called Mr. Simple and asked for repayment on the twenty million dollar loan.

      Since Mr. Simple could not pay, the banker took all the investor's property, including the stock of Simple Company.

      Mr. Simple was fortunate to find a distant relative that allowed him to sleep on a cot in the garage, while he worked as a bag boy at the supermarket to pay for food.

      Meanwhile, Mr. Sharp lived happily on his beach in Tahiti, snuggling up with island women and drinking vodka tonics.

      Mr. Sharp on the beach, drinking vodka tonics.


      In this parable, the fraud is plain.

      Mr. Sharp persuaded the investor to exchange real assets for an illusion.

      Mr. Sharp's 'intentional perversion of truth' was his suggestion that market capitalization was worth more than cash in the bank.

      A director has a legal and equitable duty to act in the best interests of the shareholder.

      An accounting loophole allowed the company to continue to show profits, even though the money was used to pay a director.

      Mr. Sharp had a legal and equitable duty to act in the best interests of the shareholder, not in his own interests.

      He failed in this duty.

      All that is needed to prove fraud is to show that the director had the intent to divert the investor's assets to his own benefit and that he knew the audited reports were misleading.

      Real Life Is More Complicated

      The buybacks that dominated American finance over the last generation were more complex and better concealed than in our fable.

      Nevertheless, the principle is the same and the fraud is greater for being better hidden.

      The worth of companies with many affiliates, thousands of employees and hundreds of products, is not clear in financial accounts that misstate profits and camouflage assets and liabilities.

      Fraud becomes darker when conflicted fiduciaries control companies through mutual funds.

      The fraud becomes darker when fiduciaries with conflicted interests control companies through mutual funds.

      Fund managers have reason to inflate portfolio values on which their fees are based.

      This may seem to be to the investors' advantage.

      However, eighty percent of equity mutual funds are long-term savings, intended for retirement or a child's education. Much of this money is in 401(k), Keogh, or IRA plans, with early withdrawal subject to fines or taxes.

      Unrealized capital gains represent higher fees to locked-in investors of mutual funds and pension plans.

      A prudent fund manager with a sense of fiduciary responsibility would prefer the stock of companies that reinvest profits to maximize the capacity to pay dividends when the investor retires.

      Stock Buybacks: A Ponzi Scheme?

      It is not ethical to pay management excessive salaries and dissipate corporate reserves merely to temporarily jack up stock prices.

      Investors are dazzled by the illusion that market value is wealth, while the wise guys walk away with the cash.

      When everyone is happy, who will believe they are being defrauded?

      As long as everyone is happy, who will believe they are being defrauded?

      In the 1960s, when I was working in the Brazilian capital market, I witnessed a much-publicized Ponzi scheme called 'Carnet Fartura' that went on for a while, even though the fraud was obvious to most investors.

      Eventually, of course, the scheme blew up, inflicting losses on its victims. Later, I spoke with a man who had lost a large amount in this fraud.

      'How could this happen?' I asked,

      'You knew the scheme was a sham.'

      'Yes I did,' the investor replied,

      'but it was so profitable while it lasted, and I thought that it would keep going for just a while longer.'

      So it was with the Great Buyback Scam of the twentieth century.

      When the Bubble burst in 2000, many who knew the market was over-valued were tempted to hang on too long.

      Tort Lawyers, Boomers, and Foreign Issuers

      Even one successful suit based on alleged harm from buyback programs could throw cold water on the practice.

      Any decrease in buybacks would remove support from the market, allowing stock prices to retreat to levels justified by cash dividends.

      The buyback era would be over and the market would move into a new phase, influenced by causes not yet apparent.

      Foreign issuers, with different motives than domestic companies, will take advantage of low capital costs.

      However, the end of buybacks does not depend on tort lawyers:

      The practice is self-defeating.

      As dividend yields approach zero and as baby boomers near retirement, investors will switch their tax-deferred savings from equities to fixed income securities, reducing the upward pressure on stock prices.

      Meanwhile, foreign issuers, with different motives than domestic companies, will take advantage of low capital costs.

      The lower the cost of capital, the more foreign issues will come to the market, eventually swamping domestic buybacks.

      It will take more and more money each year for companies to keep prices going up and keep the buyback scam going.

      When profits can no longer increase fast enough, the buyback money needed to support the market will not be there.

      The manipulation will have run its course.

    • just another pumping scam. for each announcement of stock buyback, it is followed with a disclosure:
      "The Board's authorization of the repurchase program may be modified, suspended, or discontinued at any time."

    • Its nothing but a scam to increase eps and put more $$$ into pockets of cmgs ceos. This article will explain how the scam works.
      Stock buybacks
      Three-Card Monte and the Great EPS Scam
      By John Schroy, on November 5th, 2006 | Skip to comments

      Reading time: 5 – 8 minutes

      Now that the class-action sharks have begun to notice the juicy potential of the trillion-dollar corporate buyback fraud, its time to carefully evaluate their chances of winning.

      In this article:
      What is a buyback really worth?
      The EPS scam and three-card monte
      Conned professors
      Increasing EPS without  buybacks
      Test your advisor
      Related Posts
      All it will take is one highly publicized successful suit with billion dollar damages to convince corporate executives of the error of their ways, sending tort lawyers into a feeding frenzy, reducing corporate buybacks, and crashing the market.

      In “Stock Buybacks, Dividend Equivalency, and Securities Fraud,” the flaws in the “stock-buybacks-are-just-a-form-of-dividends” argument were exposed.

      Here I discuss the quid-pro-quo offered to shareholders in lieu of dividends — the sop proffered to those who don’t sell into a buyback: *the highly touted advantage of “increased earnings-per-share“.

      What is a buyback really worth?
      The fast-talking con men who cook up buyback schemes tell naïve investors:

      “Stock buybacks are a more efficient form of dividends, but if you don’t want to sell us your shares, you’ll still benefit: your earnings-per-share will increase and your stock will be worth more.”

      Surprisingly, millions seem to be taken in by this line, including SEC commissioners, professors at leading business schools, editors of financial newspapers, and certified financial analysts.

      So slick is the Great EPS Scam that only those who really spend time and stress their brains to think about it, escape being fooled.

      The EPS scam and three-card monte

      Can you pick out the joker?
      Three-card Monte is a time-honored, street-corner con game the uses misdirection, sleight of hand, and shills to separate victims from their money.

      The Great EPS Scam is a similar con game, using Wall Street ‘experts’ as shills to distract investors with promises of “enhanced EPS“, while corporate flim flam artists misdirect billions of shareholder money into their own pockets through the artifice of stock options.

      The key to this scam is the suggestion that higher earnings-per-share somehow benefit shareholders.

      The argument is that, as a result of the stock buyback, the number of shares will decline, while earnings will stay the same (or increase): therefore, earnings per share for the non-selling shareholders will go up!

      Of course, there is a much simpler and far less costly way of increasing earnings-per-share (if this were indeed something good in itself). A company can simply do a reverse stock split: substituting every ten shares with five shares (for example). Earnings per share will automatically increase and the company will not have to distribute cash to only some shareholders in order to achieve this “benefit”.

      The EPS Scam also involves an implied ‘forward looking statement’ about earnings. The fact that historical earnings per share increase as the result of a buyback should be irrelevant to shareholders; it’s future earnings that count!

      The buyback con artists are therefore saying or implying that future earnings will stay the same or increase — despite the drain on corporate finances related to the cash and borrowings needed to pay for the buyback.

      Conned professors
      It is not difficult to find finance professors at famous universities who have gone on record endorsing the EPS Scam.

      Let's get rid of that excess blood ...
      They equate increased earnings-per-share, with increased intrinsic value for the entire company, disregarding the cost of the cash “bloodletting” that stock buybacks entail.

      In this they resemble medieval sorcerers, extracting blood from patients to bring body humors into balance. Does a company really benefit from having less cash?

      How can financial solvency be improved by giving away money?

      What about reserves for bad years?

      If you think about it, you’ll realize that increased EPS does not necessarily mean increased intrinsic value for the whole company.

      For example, a reverse stock split increases EPS without improving corporate intrinsic value one iota.

      See: “The Boeing Buyback” essay for a case showing flaws in the “buybacks-are-good-for-shareholders” argument.

      Increasing EPS without  buybacks
      Now, I’m not one to suggest the increased earnings per share, taken out of context, are necessarily good for shareholders.

      In this article:
      What is a buyback really worth?
      The EPS scam and three-card monte
      Conned professors
      Increasing EPS without  buybacks
      Test your advisor
      Related Posts
      However, if for some reason corporate executives want to increase earnings per share, they can, as suggested above, do a reverse stock split.

      Because most US stocks are held in book-entry form, brokers and custodians can effect reverse stock splits by changing a few lines of computer instructions.

      The fact that some investors will end up with fractional shares is no big deal: fractional shares are an essential element in the operations of money market mutual funds and dividend reinvestment schemes.

      With most brokers, it is no longer necessary to go to an odd-lot market to sell fractional shares. (Charles Schwab, for example, handles sales of fractional shares for clients at no extra cost, and pays proportionate dividends on fractional shares.)

      If corporate executives were honest and sincerely wanted to distribute excess cash fairly to shareholders, while increasing earnings per share, all that would be necessary would be to pay a regular dividend in lieu of a buyback, while doing a reverse stock split.

      But obviously, that would defeat the purpose of the Great Buyback Fraud: to divert corporate cash into the pockets of executives by means of stock options.

      Test your advisor
      If you wonder how smart your investment advisor really is (despite all those letters after his or her name), just ask about the advantages of stock buybacks.

      If your advisor gives you the “increased EPS is good for you” line, you know that you’re facing either a shill for buyback con men, or a victim of the “EPS mushy brain syndrome” that has infected such a large part of the financial community.

    • It will open up in AM and close down just like all other times. Just chek all the historical prices and u will see the pattern. None of the buy backs have been fulfilled just a scam for funds to dump!

416.20-3.68(-0.88%)10:31 AMEDT