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 Stanley Black & Decker, Inc. (NYSE:SWK).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
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. 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.’
Stanley Black & Decker Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Jaime Ramirez sold US$918k worth of shares at a price of US$111 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$135. While their view may have changed since they sold, this isn’t a particularly bullish sign. 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 46.9% of Jaime Ramirez’s stake.
All up, insiders sold more shares in Stanley Black & Decker than they bought, over the last year. They sold for an average price of about US$121. It’s not too encouraging to see that insiders have sold at below the current price. Since insiders sell for many reasons, we wouldn’t put too much weight on it. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Stanley Black & Decker better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Stanley Black & Decker Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at Stanley Black & Decker. In total, insiders sold US$551k worth of shares in that time, and we didn’t record any purchases whatsoever. In light of this it’s hard to argue that all the directors think that the shares are a bargain.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 0.2% of Stanley Black & Decker shares, worth about US$47m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Stanley Black & Decker Insider Transactions Indicate?
Insiders sold Stanley Black & Decker shares recently, but they didn’t buy any. And our longer term analysis of insider transactions didn’t bring confidence, either. While insiders do own shares, they don’t own a heap, and they have been selling. So we’d only buy after careful consideration. 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, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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.