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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Fossil Group, Inc. (NASDAQ:FOSL).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Fossil Group Insider Transactions Over The Last Year
The Executive Vice President of Human Resources, Darren Hart, made the biggest insider sale in the last 12 months. That single transaction was for US$801k worth of shares at a price of US$9.71 each. That means that even when the share price was below the current price of US$17.93, an insider wanted to cash in some shares. 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 80% of Darren Hart's stake.
Happily, we note that in the last year insiders paid US$1.7m for 339.36k shares. But insiders sold 112.48k shares worth US$1.2m. In total, Fossil Group insiders bought more than they sold over the last year. They paid about US$4.87 on average. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
Fossil Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Fossil Group Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at Fossil Group. Specifically, insiders ditched US$1.2m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Does Fossil Group Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company 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. Fossil Group insiders own about US$85m worth of shares. That equates to 9.2% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Fossil Group Insiders?
Insiders haven't bought Fossil Group stock in the last three months, but there was some selling. But we take heart from prior transactions. It's good to see insiders are shareholders. So we're happy enough to look past some selling. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Fossil Group. Case in point: We've spotted 4 warning signs for Fossil Group you should be aware of, and 1 of these is a bit concerning.
Of course Fossil Group 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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