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 before you buy or sell Old Dominion Freight Line, Inc. (NASDAQ:ODFL), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 equally, we would consider it foolish to ignore insider transactions altogether. 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.’
The Last 12 Months Of Insider Transactions At Old Dominion Freight Line
Over the last year, we can see that the biggest insider sale was by Senior Vice President of Operations David Bates for US$296k worth of shares, at about US$152 per share. That means that an insider was selling shares at around the current price of US$151. While their view may have changed since the sale, this is not a particularly positive fact. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.
In the last twelve months insiders netted US$415k for 2.75k shares sold. Over the last year we saw more insider selling of Old Dominion Freight Line shares, than buying. The sellers received a price of around US$151, on average. We don’t gain much confidence from insider selling near the recent share price. Since insiders sell for many reasons, we wouldn’t put too much weight on it. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Old Dominion Freight Line Have Sold Stock Recently
Over the last three months, we’ve seen significant insider selling at Old Dominion Freight Line. Specifically, David Bates ditched US$296k 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 Old Dominion Freight Line Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Old Dominion Freight Line insiders own 12% of the company, currently worth about US$1.5b based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Old Dominion Freight Line Insiders?
An insider sold Old Dominion Freight Line shares recently, but they didn’t buy any. And even if we look to the last year, we didn’t see any purchases. But since Old Dominion Freight Line is profitable and growing, we’re not too worried by this. 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. Of course, the future is what matters most. So if you are interested in Old Dominion Freight Line, you should check out this free report on analyst forecasts for the company.
Of course Old Dominion Freight Line may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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