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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Chuy's Holdings, Inc. (NASDAQ:CHUY), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Chuy's Holdings Insider Transactions Over The Last Year
The insider, Michael Hatcher, made the biggest insider sale in the last 12 months. That single transaction was for US$114k worth of shares at a price of US$23.03 each. That means that an insider was selling shares at slightly below the current price (US$40.54). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 20% of Michael Hatcher's stake. Michael Hatcher was the only individual insider to sell over the last year.
In the last twelve months insiders purchased 11.23k shares for US$184k. But insiders sold 4.96k shares worth US$114k. In the last twelve months there was more buying than selling by Chuy's Holdings insiders. 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!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders at Chuy's Holdings Have Sold Stock Recently
The last three months saw significant insider selling at Chuy's Holdings. In total, insider Michael Hatcher sold US$114k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Does Chuy's Holdings Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. From our data, it seems that Chuy's Holdings insiders own 1.1% of the company, worth about US$9.0m. Whilst better than nothing, we're not overly impressed by these holdings.
So What Does This Data Suggest About Chuy's Holdings Insiders?
An insider sold stock recently, but they haven't been buying. In contrast, they appear keener if you look at the last twelve months. Still, insiders don't own a great deal of the stock. So we can't be sure that insiders are optimistic. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Chuy's Holdings. Every company has risks, and we've spotted 3 warning signs for Chuy's Holdings you should know about.
Of course Chuy's Holdings 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.
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. 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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