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 before you buy or sell Alimentation Couche-Tard Inc. (TSE:ATD.B), 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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
The Last 12 Months Of Insider Transactions At Alimentation Couche-Tard
Over the last year, we can see that the biggest insider sale was by the Co-Founder & Corporate Director, Richard Fortin, for CA$6.4m worth of shares, at about CA$40.66 per share. That means that an insider was selling shares at around the current price of CA$39.81. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
In the last twelve months insiders purchased 27048 shares for CA$971k. But insiders sold 194500 shares worth CA$7.9m. Over the last year we saw more insider selling of Alimentation Couche-Tard shares, than buying. They sold for an average price of about US$40.60. We don't gain confidence from insider selling below the recent share price. But we wouldn't put too much weight on the insider selling. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders at Alimentation Couche-Tard Have Sold Stock Recently
Over the last three months, we've seen notably more insider selling, than insider buying, at Alimentation Couche-Tard. In total, Co-Founder & Corporate Director Richard Fortin sold US$7.6m worth of shares in that time. On the flip side, insiders spent US$633k on purchasing shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.
Does Alimentation Couche-Tard Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Alimentation Couche-Tard insiders own 5.5% of the company, worth about CA$2.5b. 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 Alimentation Couche-Tard Insiders?
The stark truth for Alimentation Couche-Tard is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But it is good to see that Alimentation Couche-Tard is growing earnings. 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 Alimentation Couche-Tard 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.
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 firstname.lastname@example.org. 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.