We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Ingersoll-Rand Plc (NYSE:IR), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.
Ingersoll-Rand Insider Transactions Over The Last Year
The Senior VP of Innovation, Paul Camuti, made the biggest insider sale in the last 12 months. That single transaction was for US$738k worth of shares at a price of US$105 each. That means that an insider was selling shares at slightly below the current price (US$144). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can’t be sure if it does mean insiders think the shares are fully valued, so it’s only a weak sign. It is worth noting that this sale was only 13% of Paul Camuti’s holding.
Insiders in Ingersoll-Rand didn’t buy any shares in the last year. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Ingersoll-Rand better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Ingersoll-Rand Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Ingersoll-Rand insiders own about US$96m worth of shares. That equates to 0.3% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Do The Ingersoll-Rand Insider Transactions Indicate?
The fact that there have been no Ingersoll-Rand insider transactions recently certainly doesn’t bother us. Still, the insider transactions at Ingersoll-Rand in the last 12 months are not very heartening. But we do like the fact that insiders own a fair chunk of the company. Of course, the future is what matters most. So if you are interested in Ingersoll-Rand, you should check out this free report on analyst forecasts for the company.
Of course Ingersoll-Rand 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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