We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Avery Dennison Corporation (NYSE:AVY).
Do Insider Transactions Matter?
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 don’t think shareholders should simply follow insider transactions. 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 Avery Dennison
In the last twelve months, the biggest single sale by an insider was when President of Label & Graphic Materials Georges Gravanis sold US$1.5m worth of shares at a price of US$113 per share. That means that an insider was selling shares at around the current price of US$108. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price.
In the last twelve months insiders netted US$1.6m for 14.28k shares sold. All up, insiders sold more shares in Avery Dennison than they bought, over the last year. They sold for an average price of about US$112. It’s not ideal to see that insiders have sold at around the current price. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Avery Dennison better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Avery Dennison insiders own about US$63m worth of shares. That equates to 0.7% of the company. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Avery Dennison Tell Us?
The fact that there have been no Avery Dennison insider transactions recently certainly doesn’t bother us. We don’t take much encouragement from the transactions by Avery Dennison insiders. The modest level of insider ownership is, at least, some comfort. Of course, the future is what matters most. So if you are interested in Avery Dennison, you should check out this free report on analyst forecasts for the company.
But note: Avery Dennison 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.
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 email@example.com. 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.