Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!
It is not uncommon to see companies perform well in the years after insiders buy shares. 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 we'll take a look at whether insiders have been buying or selling shares in Dover Corporation (NYSE:DOV).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. 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'.
The Last 12 Months Of Insider Transactions At Dover
Independent Director Kristiane Graham made the biggest insider sale in the last 12 months. That single transaction was for US$4.1m worth of shares at a price of US$82.75 each. That means that even when the share price was below the current price of US$96.54, an insider wanted to cash in some shares. Even though it doesn't necessarily mean anything, that's certainly not a positive sign, in our book. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price. Please note, however, that this single sale was just 8.6% of Kristiane Graham's stake.
We note that in the last year insiders divested 135.26k shares for a total of US$11m. All up, insiders sold more shares in Dover than they bought, over the last year. They sold for an average price of about US$83.22. It's not ideal to see that insiders have sold at around the current price. While some insiders have decided to take some money off the table, we wouldn't put too much weight on this fact. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Dover better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders at Dover Have Sold Stock Recently
Over the last three months, we've seen significant insider selling at Dover. In total, insiders sold US$4.1m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the directors think that the shares are a bargain.
Insider Ownership of Dover
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. Dover insiders own about US$194m worth of shares (which is 1.4% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Dover Insider Transactions Indicate?
Insiders haven't bought Dover stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn't show any insider buying. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course Dover may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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 email@example.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.