It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Reliance Steel & Aluminum Co. (NYSE:RS), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.’
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The Last 12 Months Of Insider Transactions At Reliance Steel & Aluminum
Over the last year, we can see that the biggest insider sale was by Senior Advisor Gregg Mollins for US$2.8m worth of shares, at about US$92.83 per share. That means that an insider was selling shares at around the current price of US$78.42. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price.
We note that in the last year insiders divested 127.90k shares for a total of US$11m. In total, Reliance Steel & Aluminum insiders sold more than they bought over the last year. The sellers received a price of around US$89.59, on average. It’s not particularly great to see insiders were selling shares around current prices. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
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Insiders at Reliance Steel & Aluminum Have Sold Stock Recently
The last three months saw significant insider selling at Reliance Steel & Aluminum. Specifically, insiders ditched US$2.7m 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.
Does Reliance Steel & Aluminum Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It’s great to see that Reliance Steel & Aluminum insiders own 3.6% of the company, worth about US$198m. 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 Reliance Steel & Aluminum Insiders?
Insiders haven’t bought Reliance Steel & Aluminum stock in the last three months, but there was some selling. And even if we look to the last year, we didn’t see any purchases. But it is good to see that Reliance Steel & Aluminum is growing earnings. The company boasts high insider ownership, but we’re a little hesitant, given the history of share sales. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Reliance Steel & Aluminum.
But note: Reliance Steel & Aluminum may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.