We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Strattec Security Corporation (NASDAQ:STRT), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.’
Strattec Security Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Non-Executive Chairman Harold Stratton for US$112k worth of shares, at about US$32.06 per share. So we know that an insider sold shares at around the present share price of US$28.78. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at around the current price.
In the last twelve months insiders netted US$200k for 6.00k shares sold. Over the last year we saw more insider selling of Strattec Security shares, than buying. The average sell price was around US$33.33. It’s not particularly great to see insiders were selling shares around current prices. Since insiders sell for many reasons, we wouldn’t put too much weight on it. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Strattec Security Insiders Are Selling The Stock
The last three months saw significant insider selling at Strattec Security. Specifically, Harold Stratton ditched US$112k 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.
Insider Ownership of Strattec Security
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. From looking at our data, insiders own US$4.5m worth of Strattec Security stock, about 4.3% of the company. I generally like to see higher levels of ownership.
So What Do The Strattec Security Insider Transactions Indicate?
An insider sold stock recently, but they haven’t been buying. And even if we look to the last year, we didn’t see any purchases. When you consider that most companies have higher levels of insider ownership, we’re a little wary. We’d certainly think twice before buying! To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
But note: Strattec Security 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.
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