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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 before you buy or sell Owens Corning (NYSE:OC), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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 don’t think shareholders should simply follow insider transactions. 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’.
The Last 12 Months Of Insider Transactions At Owens Corning
Over the last year, we can see that the biggest insider sale was by the former Executive Chairman, Michael Thaman, for US$1.5m worth of shares, at about US$51.49 per share. That means that even when the share price was below the current price of US$58.20, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it’s only a weak signal. We note that the biggest single sale was only 3.4% of Michael Thaman’s holding.
Over the last year, we note insiders sold 66689 shares worth US$3.4m. In the last year Owens Corning insiders didn’t buy any company stock. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Owens Corning Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at Owens Corning. In total, insiders sold US$2.2m worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
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 1.6% of Owens Corning shares, worth about US$99m. 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 Does This Data Suggest About Owens Corning Insiders?
Insiders sold Owens Corning shares recently, but they didn’t buy any. And even if we look to the last year, we didn’t see any purchases. But it is good to see that Owens Corning is growing earnings. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. We’re in no rush to buy! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Owens Corning.
But note: Owens Corning 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.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
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If you spot an error that warrants correction, please contact the editor at email@example.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.