We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Quaker Chemical Corporation (NYSE:KWR).
Do Insider Transactions Matter?
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.
We don’t think shareholders should simply follow insider transactions. 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’.
Check out our latest analysis for Quaker Chemical
Quaker Chemical Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Independent Director, Michael Shannon, for US$1.5m worth of shares, at about US$156 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$193. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it’s only a weak signal. It is worth noting that this sale was 69% of Michael Shannon’s holding.
In the last year Quaker Chemical insiders didn’t buy any company stock. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at Quaker Chemical Have Sold Stock Recently
Over the last three months, we’ve seen significant insider selling at Quaker Chemical. Specifically, insiders ditched US$1.5m worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership of Quaker Chemical
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 2.1% of Quaker Chemical shares, worth about US$72m. 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 Quaker Chemical Insider Transactions Indicate?
Insiders sold stock recently, but they haven’t been buying. And there weren’t any purchases to give us comfort, over the last year. Insiders own shares, but we’re still pretty cautious, given the history of sales. So we’d only buy after careful consideration. 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. At Simply Wall St, we’ve found that Quaker Chemical has 2 warning signs (1 doesn’t sit too well with us!) that deserve your attention before going any further with your analysis.
Of course Quaker Chemical 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. 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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