There is much investors can learn by examining how company insiders handle positions in their own companies. While these insiders may sell shares for a variety of reasons (like buying a house, paying for college, preparing for retirement), they generally buy for only one reason: they expect to make more money.
The chief executive officer often is among the largest and best-informed shareholders in any corporation. Let’s see whether Chipotle Mexican Grill Inc. (NYSE: CMG) CEO Brian Niccol has been increasing or decreasing his shares over the past year and whether he might know something we don’t.
What You Need to Know About Chipotle Mexican Grill
Chipotle Mexican Grill owns and operates American fast-casual restaurants featuring food made to order in front of the customer. Offerings include burritos, burrito bowls, quesadillas, tacos, and salads made with fresh ingredients. (Check out the number of Chipotle locations by state.)
The company was founded in 1993 and is headquartered in Newport Beach, California. That is also the home of investment manager PIMCO and insurer Pacific Life. Chipotle’s competitors include Shake Shack Inc. (NYSE: SHAK), Starbucks Corp. (NASDAQ: SBUX), and Wingstop Inc. (NASDAQ: WING). Niccol has been Chipotle’s chief executive since 2018 and board chair since 2020.
The company reported annual revenue of more than $9.5 billion, and its market capitalization is over $71.2 billion. The share price is more than 60% higher than it was a year ago, outperforming the broader markets. The stock hit an all-time high of $2,725.83 a share earlier this month, and it is up almost 14% year to date.
How Chipotle’s CEO Is Trading
One year ago, Niccol owned almost 30,100 shares, worth over $45.2 million. On last look, he owned more than 23,300 shares. Despite reducing the stake by 6,700 or so shares, its value has risen by about 15.3% to around $52.1 million as the share price soared.
| Shares a Year Ago | Shares Today | % Change |
| 30,093 | 23,347 | −22.42% |
As mentioned, CEOs and other insiders may sell shares for many reasons. In this case, CEO Brian Niccol’s sales over the past year have been part of a plan intended to comply with Rule 10b5-1 of the Securities and Exchange Act of 1934. That is, he has been exercising stock options and then selling some (but not all) of those shares. He is not the only officer at the company with this pattern of options exercised followed by sales.
Other insiders to watch are Director Albert Baldocchi and Chief Financial Officer John Hartung. both of whom have stakes larger than Niccol’s. They were worth about $154.2 million and almost $150.1 million, respectively, before Baldocchi sold a thousand shares last week. Back in December, one director bucked the past year’s selling trend and picked up less than 900 of the shares.
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