Insiders at Chipotle Mexican Grill have netted about $16 million selling shares of the restaurant chain in the past month.
Co-chief executive Montgomery Moran was the largest seller, unloading 95,000 shares for a $6.1 million gain after subtracting the costs of exercising options. Chief financial officer John Hartung gained $2.6 million on the sale of 34,288 shares, while chairman and co-CEO Steven Ells sold 25,747 shares, netting $1.6 million.
Many of the shares sold came from options issued when Chipotle went public at $22 a share in January 2006. Insiders had to wait three years to cash them out.
“Many of our insiders have a significant percentage of their individual assets in Chipotle, and the moves were made to allow them to diversify,” company spokesman Chris Arnold said, speaking on behalf of the company and the executives.
The shares, purchased mostly at $22, were sold in the high-$70s-to-low-$80s range from mid-April to early May.
While Chipotle’s market value of $2.5 billion dwarfs the $16 million insiders took out, investors often question why they should buy when those most in the know are going the other way.
“If you think a stock is going to go up, you won’t be selling in large quantities,” said Bill Zielinski, who analyzed the company’s insider-selling activity for Seeking Alpha, an online investment site.
One concern analysts have is that the chain’s higher-priced items may lose appeal during tight economic times.
“Chipotle’s restaurant traffic trends have lagged other fast-casual dining rivals, indicating that customers are resisting menu price increases or trading down to lower-priced alternatives,” Morningstar analysts recently wrote.
The company is testing several “Low Roller” menu items in Denver that it hopes will appeal to price-sensitive customers.
The stock’s volatility also might have motivated insiders to sell when they could. Chipotle shares doubled on their first day of trading and reached a high of $152.36 in late December 2007. They swooned to a low of $38.69 in November and closed trading Monday at $77.32.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
