The fact that multiple The Procter & Gamble Company (NYSE:PG) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, if numerous insiders are selling, shareholders should investigate more.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
Procter & Gamble Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the President, Jon Moeller, sold US$4.5m worth of shares at a price of US$149 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$157. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 10% of Jon Moeller's stake.
Procter & Gamble insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and 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!
I will like Procter & Gamble better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Procter & Gamble Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Procter & Gamble shares. Specifically, Chief Executive Officer of Baby Ma. de Vera Francisco ditched US$1.3m 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.
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. It's great to see that Procter & Gamble insiders own 0.05% of the company, worth about US$192m. 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 Do The Procter & Gamble Insider Transactions Indicate?
An insider sold Procter & Gamble shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. On the plus side, Procter & Gamble makes money, and is growing profits. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Procter & Gamble. You'd be interested to know, that we found 2 warning signs for Procter & Gamble and we suggest you have a look.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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.
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