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Should You Be Worried About Insider Transactions At AAR Corp. (NYSE:AIR)?

Simply Wall St

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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 shareholders might well want to know whether insiders have been buying or selling shares in AAR Corp. (NYSE:AIR).

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.

Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia 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'.

See our latest analysis for AAR

The Last 12 Months Of Insider Transactions At AAR

The Chairman of the Board, David Storch, made the biggest insider sale in the last 12 months. That single transaction was for US$3.0m worth of shares at a price of US$47.37 each. While we don't usually like to see insider selling, it's more concerning if the sales take price at a lower price. The silver lining is that this sell-down took place above the latest price (US$30.58). So it is hard to draw any strong conclusion from it.

Over the last year, we note insiders sold 173k shares worth US$7.8m. In the last year AAR insiders didn't buy any company stock. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

NYSE:AIR Recent Insider Trading, May 31st 2019

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

AAR Insiders Are Selling The Stock

The last three months saw significant insider selling at AAR. In total, Independent Director Anthony Anderson sold US$120k 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 insiders think that the shares are a bargain.

Insider Ownership of AAR

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. We usually like to see fairly high levels of insider ownership. AAR insiders own about US$57m worth of shares. That equates to 5.5% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At AAR Tell Us?

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. But it is good to see that AAR is growing earnings. While insiders do own shares, they don't own a heap, and they have been selling. We'd think twice before buying! 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.

But note: AAR 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.

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 editorial-team@simplywallst.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.