Insiders who acquired US$773k worth of The Sherwin-Williams Company's (NYSE:SHW) stock at an average price of US$258 in the past 12 months may be dismayed by the recent 5.4% price decline. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth US$678k, which is not great.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At Sherwin-Williams
In the last twelve months, the biggest single purchase by an insider was when Chairman & CEO John Morikis bought US$519k worth of shares at a price of US$260 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$226). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months insiders purchased 3.00k shares for US$773k. But they sold 2.08k shares for US$575k. In the last twelve months there was more buying than selling by Sherwin-Williams insiders. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Sherwin-Williams is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership Of Sherwin-Williams
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Sherwin-Williams insiders own 0.3% of the company, worth about US$173m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At Sherwin-Williams Tell Us?
The fact that there have been no Sherwin-Williams insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, Sherwin-Williams insiders feel good about the company's future. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We've spotted 1 warning sign for Sherwin-Williams you should be aware of.
Of course Sherwin-Williams may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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