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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. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Perrigo Company plc (NYSE:PRGO), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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 would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
Perrigo Insider Transactions Over The Last Year
The Independent Director Theodore Samuels made the biggest insider purchase in the last 12 months. That single transaction was for US$211k worth of shares at a price of US$46.91 each. That implies that an insider found the current price of US$47.26 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. Happily, the Perrigo insiders decided to buy shares at close to current prices.
Happily, we note that in the last year insiders paid US$564k for 11.97k shares. On the other hand they divested 2.66k shares, for US$110k. Overall, Perrigo insiders were net buyers during the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Perrigo is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Have Perrigo Insiders Traded Recently?
Over the last three months, we've seen a bit of insider selling at Perrigo. US$110k worth of shares were sold by Chief Transformation Officer and Executive VP of Global Operations & Supply Chain Ronald Janish. But US$103k was spent on buying, too, . While it's not great to see insider selling, the net amount sold isn't enough for us to want to read anything into it.
Does Perrigo 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. 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 appears that Perrigo insiders own 0.3% of the company, worth about US$19m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Do The Perrigo Insider Transactions Indicate?
We note that there's been a little more insider selling than buying, recently. But the difference isn't enough to have us worried. But insiders have shown more of an appetite for the stock, over the last year. Overall we don't see anything to make us think Perrigo insiders are doubting the company, and they do own shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Perrigo. At Simply Wall St, we found 2 warning signs for Perrigo that deserve your attention before buying any shares.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.
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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