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 we’ll take a look at whether insiders have been buying or selling shares in SiteOne Landscape Supply, Inc. (NYSE:SITE).
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
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 Colombia 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’.
SiteOne Landscape Supply Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Executive Vice President of Strategy Pascal Convers sold US$5.9m worth of shares at a price of US$91.73 per share. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of US$55.59. So it is hard to draw any strong conclusion from it.
Over the last year we saw more insider selling of SiteOne Landscape Supply shares, than buying. The sellers received a price of around US$91.55, on average. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is US$55.59). You can see the insider transactions over the last year depicted in the chart 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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Does SiteOne Landscape Supply Boast High Insider Ownership?
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. SiteOne Landscape Supply insiders own 1.2% of the company, currently worth about US$26m 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 SiteOne Landscape Supply Insider Transactions Indicate?
It doesn’t really mean much that no insider has traded SiteOne Landscape Supply shares in the last quarter. We don’t take much encouragement from the transactions by SiteOne Landscape Supply insiders. The modest level of insider ownership is, at least, some comfort. 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 SiteOne Landscape Supply may not be the best stock to buy. So you may wish to see this free collection of high quality 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.