Is Chipotle (NYSE: CMG) headed higher, or lower? That's the question we ask when we evaluate insider buying and selling. We ask because the way that executives spend their paychecks often reflects what they think of their companies' prospects

Of course, not all buys are equal. According to two decades worth of research from Dr. H. Nejat Seyhun, compiled in his book, Investment Intelligence from Insider Trading, buying is most predictive when it (a) comes from the CEO or other top-level executive, and (b) is performed in bulk. Seyhun found buys of between 10,000 and 100,000 shares most informative.

How do Chipotle's managers measure up against Seyhun's benchmarks over the past year? See for yourself:

Insider Rating Bearish: Most sales were at prices well below current.
Business Description An operator of fast-casual Mexican restaurants serving burritos, tacos, and salads.
Recent Price $212.86
CAPS Stars (out of 5) **
Percentage of Shares Owned by Insiders 2.17%
Net Buying (Selling)* ($5.57 million)
Last Buyer (% Increase) None over the past 12 months
Last Seller (% Decrease) Darlene Friedman, Director
1,000 shares at $150 apiece on Aug. 2, 2010
(Reduced direct holdings by 14%.)
Competitors California Pizza Kitchen (Nasdaq: CPKI)
Red Robin Gourmet Burgers (Nasdaq: RRGB)
Yum! Brands (NYSE: YUM)

Sources Form 4 Oracle, Capital IQ, and Motley Fool CAPS. (Data current as of Oct. 26.)
*Open market sales and purchases only.

What we're tracking here, and why
Insider buying data can be confusing. Here, I'm concentrating only on buying and selling conducted in the open market. With most of these transactions, insiders control the timing. Other times they're buying or selling under the purview of a 10b5-1 plan. Either way, personal holdings are being bought and sold.

Those personal holdings matter the most -- they're the shares executives hold for investment, rather than compensation. Employee stock options are different; they're compensatory in the purest sense. I've stripped out options-related buying and selling from the calculations you see above.

The Foolish view: Bearish
Chipotle has been a wonderful stock to own recently; it's been a triple for my wife's IRA. But with the stock up more than 160% over the past year, it's time to ask whether taking profits makes sense. Fools disagree on this issue.

All-Star investor baselineace, who first endorsed the stock in CAPS at $145.60 a share, was still bullish earlier this month. "Chipotle is currently my largest 'real-life' holding for endless reasons," he wrote in pitching the stock.

He calls Chipotle an "ultimate growth stock" whose attributes include market leadership, a global market opportunity, a commitment to innovation expressed via smartphone ordering apps, a flexible menu, a clean balance sheet, strong margins, and a visionary CEO in Steve Ellis.

In effect, he's arguing that Chipotle is the exact opposite of its former parent company, McDonald's (NYSE: MCD), which already has stores on every corner, and whose visionary leader, Ray Kroc, has long since passed on.

Insiders, for their part, seem more aligned with the Fools who give Chipotle just two out of five stars in CAPS. Combined, they've sold more than $5.5 million worth of stock on the open market since last fall. Board member Darlene Friedman was last to sell, in August, at $150 a share. Many other insiders sold around $100 a share.

I'll admit that the pattern makes me nervous, but I also have a policy of not selling while business momentum remains strong. With gross margin and returns on capital still trending higher, I'm content continue owning shares of the burrito baron.

Do you agree? Disagree? Log into Motley Fool CAPS today and tell us how you would rate Chipotle. You can also add the stock to your watchlist.

And if you want me to take a Foolish peek at the insider action of your favorite stock, email me here or use the comments box below. I'll write this column as often as you, our readers, demand.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Both our Motley Fool Hidden Gems and Motley Fool Rule Breakers services have recommended subscribers buy shares of Chipotle. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He owned shares of Chipotle at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. The Motley Fool owns shares of Yum! Brands and is also on Twitter as @TheMotleyFool. Its disclosure policy has its eye on you.