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Bob Gabele's Stock of the Day

May 10, 2000
Brinker International Inc [EAT]

Number of Insiders

Number of Shares Bought/Sold

Total Value

8 549,561 $15,059,996

We last covered insider selling at restaurateur Brinker International in early February. The stock promptly swooned, no doubt in part due to general investor disinterest in the sector—a hypothesis supported by the fact that the stock has gained more than 40% during the recent technology bust. Even Wall Street has mustered a newfound liking to EAT, citing a renaissance of earnings and fundamental-based investing. With the optimists circling and momentum propelling the stock to higher levels, insiders are selling, even with what should be a favorable 3Q report just ahead. From February 7 through April 4, eight EAT insiders sold or filed their intentions to sell 549,561 shares at prices ranging from $23.02 to $29.12 per share.

VC, CEO Ronald McDougall filed his intentions to sell 200,000 shares. McDougall had been a net acquirer from ’94 to ’97; however, his last transactions were sales in November ’98. EVP, General Counsel Roger Thomson, a heavy seller in the prior round, continues to shed his holdings, proposing a sale of 25,000 shares. This sale will reduce his actionable position (exercisable options plus common stock) by 55%. EVP, CFO Russell Owens filed to sell 10,000 shares in only his second sale in more than five years. In fact, a previous sale in February ’99 occurred at higher prices. President, Cozymel’s Coastal Mexican Grill Division Kenneth Dennis is selling 15,188 shares. Like Owens, his last sale was in March ’99 at higher prices. Finally, Chairman Norman Brinker sold 50,000 shares, then filed his intent so sell an additional 243,942 shares. While this sale will not reduce his position to any great extent, it is his largest since March ’91. It is also important to note that Brinker is 68 years old, and could be selling for retirement-planning purposes.

With all the hoopla surrounding the recent sell-off at tech-related companies, it’s little wonder that investors are once again looking at companies like Brinker. The more important question is whether consumers will continue to visit Brinker’s eateries. Since the beginning of ’99, earnings and same-store sales have been impressive, yet the stock has gained a mere 7%, lagging the S&P by 15% over the same period. On the one hand, market rotation into fundamentally sound companies should increase the likelihood that Brinker can continue on its current path. On the other, recent insider activity does not support this notion. Brinker is the parent company to Chili's Grill and Bar, Romano's Macaroni Grill, On The Border Mexican Cafe, Maggiano's Little Italy, Cozymel's Coastal Mexican Grill and Corner Bakery.

Abbreviations

REL (Relationship)
CB = Chairman
D  = Director
O  = Officer
OD = Officer/Director
OX = Divisional Officer
OS = Officer of Subsidiary
VP = Vice President
R  = Retired

OWN (Ownership of Shares)

D = Direct Ownership
I = Indirect Ownership

TT (Transaction Type)
P = Purchase
S = Sale
X = Option exercise
Q = Disposition by exercise of option
M = Acquisition by exchange or conversion
T = Other acquisition
U = Other Disposition
H = Disposed of by gift


 
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