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 Seaboard Corporation (NYSEMKT:SEB), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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, 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 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’.
Seaboard Insider Transactions Over The Last Year
The Lead Independent Director Douglas Baena made the biggest insider purchase in the last 12 months. That single transaction was for US$53k worth of shares at a price of US$3,525 each. That means that even when the share price was higher than US$2,896 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. The only individual insider to buy over the last year was Douglas Baena.
The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insider Ownership of Seaboard
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. A high insider ownership often makes company leadership more mindful of shareholder interests. From what we can see in our data, insiders own only about US$420k worth of Seaboard shares. But they may have an indirect interest through a corporate structure that we haven’t picked up on. It’s always possible we are missing something but from our data, it looks like insider ownership is minimal.
So What Do The Seaboard Insider Transactions Indicate?
It doesn’t really mean much that no insider has traded Seaboard shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it’d be more encouraging if Seaboard insiders bought more shares in the company. So while it’s helpful to know what insiders are doing in terms of buying or selling, it’s also helpful to know the risks that a particular company is facing. To that end, you should learn about the 3 warning signs we’ve spotted with Seaboard (including 1 which is concerning).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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