Are Insiders Buying Chipotle Mexican Grill, Inc. (NYSE:CMG) Stock?
We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Chipotle Mexican Grill, Inc. (NYSE:CMG).
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Check out our latest analysis for Chipotle Mexican Grill
Chipotle Mexican Grill Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Independent Director Ali Namvar for US$953k worth of shares, at about US$318 per share. We do like to see buying, but this purchase was at a lower price. It may not shed much light on insider confidence at the current share price.
In the last twelve months insiders paid US$1.1m for 3.50k shares purchased. In the last twelve months there was more buying than selling by Chipotle Mexican Grill insiders. Their average price was about US$314. It is certainly positive to see that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today’s levels. You can see the insider transactions over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It’s great to see that Chipotle Mexican Grill insiders own 1.2% of the company, worth about US$156m. 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?
It doesn’t really mean much that no insider has traded Chipotle Mexican Grill shares in the last quarter. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like Chipotle Mexican Grill insiders think the business has merit. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Chipotle Mexican Grill.
But note: Chipotle Mexican Grill may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
