It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Steelcase Inc. (NYSE:SCS), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Steelcase Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Chief Administrative Officer Lizbeth O’Shaughnessy sold US$372k worth of shares at a price of US$18.61 per share. So what is clear is that an insider saw fit to sell at around the current price of US$17.51. 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$2.1m for 122.22k shares sold. All up, insiders sold more shares in Steelcase than they bought, over the last year. The average sell price was around US$16.84. It’s not ideal to see that insiders have sold at around the current price. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. You can see the insider transactions (by individuals) 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!
I will like Steelcase better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Steelcase Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Steelcase shares. In total, Independent Director Peter Wege dumped US$213k 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.
Does Steelcase Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It’s great to see that Steelcase insiders own 24% of the company, worth about US$499m. 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 Does This Data Suggest About Steelcase Insiders?
An insider sold Steelcase shares recently, but they didn’t buy any. And there weren’t any purchases to give us comfort, over the last year. It is good to see high insider ownership, but the insider selling leaves us cautious. 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 Steelcase may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.