We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 we’ll take a look at whether insiders have been buying or selling shares in Lennox International Inc. (NYSE:LII).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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’.
Lennox International Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Executive VP & CTO Prakash Bedapudi for US$2.1m worth of shares, at about US$207 per share. That means that an insider was selling shares at slightly below the current price (US$225). Even though it doesn’t necessarily mean anything, that’s certainly not a positive sign, in our book. When an insider sells below the current price, it does tend to make us wonder about the current valuation. Please note, however, that this single sale was just 46.2% of Prakash Bedapudi’s stake.
Over the last year, we note insiders sold 25.32k shares worth US$5.2m. All up, insiders sold more shares in Lennox International than they bought, over the last year. The sellers received a price of around US$205, on average. It’s not ideal to see that insiders have sold at around the current 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!
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Insiders at Lennox International Have Sold Stock Recently
The last quarter saw substantial insider selling of Lennox International shares. Specifically, insiders ditched US$2.9m 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.
Insider Ownership of Lennox International
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. A high insider ownership often makes company leadership more mindful of shareholder interests. Lennox International insiders own 8.5% of the company, currently worth about US$755m based on the recent share price. 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 Lennox International Insider Transactions Indicate?
Insiders haven’t bought Lennox International stock in the last three months, but there was some selling. And there weren’t any purchases to give us comfort, over the last year. But since Lennox International 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. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Lennox International.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.