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Don't Ignore The Fact That This Insider Just Sold Some Shares In PriceSmart, Inc. (NASDAQ:PSMT)

Simply Wall St

We wouldn't blame PriceSmart, Inc. (NASDAQ:PSMT) shareholders if they were a little worried about the fact that Jeffrey Fisher, a company insider, recently netted about US$739k selling shares at an average price of US$73.86. That sale reduced their total holding by 18% which is hardly insignificant, but far from the worst we've seen.

Check out our latest analysis for PriceSmart

The Last 12 Months Of Insider Transactions At PriceSmart

The CEO & Director, Sherry Bahrambeygui, made the biggest insider sale in the last 12 months. That single transaction was for US$2.8m worth of shares at a price of US$57.16 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$76.44. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 20% of Sherry Bahrambeygui's stake.

Over the last year, we note insiders sold 131816 shares worth US$8.5m. Insiders in PriceSmart didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

NasdaqGS:PSMT Recent Insider Trading, November 6th 2019

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Does PriceSmart Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that PriceSmart insiders own 12% of the company, worth about US$267m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The PriceSmart Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. It is good to see high insider ownership, but the insider selling leaves us cautious. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for PriceSmart.

But note: PriceSmart may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.