Chipotle’s Biggest Insider Stock Buy Ever
By Ed Lin Feb. 27, 2018
A couple of weeks ago I published an article that highlighted 5 stocks that I believe are well-suited for a late-stage bull market. Chipotle is one of them. Today, Barron's has a story about a large purchase of shares by a director.
Has the queso bottomed out?
Chipotle Mexican Grill (ticker: CMG) has just seen its largest-ever insider purchase of stock in dollar value.
Chipotle director and Pershing Square Capital Management partner Ali Namvar bought 3,000 Chipotle shares for $953,100, or $317.70 each. It’s Namvar’s first purchase since he was named a director along with three others in December 2016. It’s a bullish buy of the fast casual restaurant’s stock, an optimistic move by a man who may have a song in his heart. In fact, before Namvar chose to pursue investing, he was a songwriter, multi-instrumentalist and music producer.
Other Chipotle insiders have bought stock over the years, and some very recently, but we’d have to go all the way back to the company’s January 2006 initial public offering to find insiders buying more shares than Namvar. In any case, they bought at the $22 per-share IPO price, and nobody bought more than $880,000 in stock.
The overall surge since the IPO price certainly looks good--shares were trading at $323.59 midday Tuesday, boosted by an upgrade--but that’s only part of the story. The burrito-and-taco slinger has been shredded as of late; the last three calendar years were stained with double-digit percentage drops in the stock price.
Bill Ackman’s Pershing Square revealed a large stake in Chipotle in September 2016 and began to push for changes. Chipotle granted Ackman two seats on its board months later, and in November 2017, Chipotle founder, Chief Executive and Chairman Steve Ells said he would step down.
Chipotle disclosed after the market closed Feb. 13 that it named Taco Bell CEO Brian Niccol as its new head. Since then, the stock has surged 29%, and Chipotle is finally back to looking in the chips.
Disclosure: I am/we are long CMG.