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Hopeful week for insiders who might be regretting buying US$773k of The Sherwin-Williams Company (NYSE:SHW) stock earlier this year

Insiders who bought US$773k worth of The Sherwin-Williams Company (NYSE:SHW) stock in the last year recovered part of their losses as the stock rose by 5.4% last week. However, the purchase is proving to be an expensive wager as insiders are yet to get ahead of their losses which currently stand at US$23k since the time of purchase.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Sherwin-Williams

The Last 12 Months Of Insider Transactions At Sherwin-Williams

Over the last year, we can see that the biggest insider purchase was by Chairman & CEO John Morikis for US$519k worth of shares, at about US$260 per share. That means that an insider was happy to buy shares at above the current price of US$250. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

In the last twelve months insiders purchased 3.00k shares for US$773k. On the other hand they divested 1.54k shares, for US$401k. In total, Sherwin-Williams insiders bought more than they sold over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
insider-trading-volume

Sherwin-Williams is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership Of Sherwin-Williams

Many investors like to check how much of a company is owned by insiders. 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 Sherwin-Williams insiders own 0.3% of the company, worth about US$186m. 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 Does This Data Suggest About Sherwin-Williams Insiders?

The fact that there have been no Sherwin-Williams insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Sherwin-Williams insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we found 1 warning sign for Sherwin-Williams that deserve your attention before buying any shares.

Of course Sherwin-Williams may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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