Builders FirstSource Insiders Sold US$8.0m Of Shares Suggesting Hesitancy

In the last year, many Builders FirstSource, Inc. (NYSE:BLDR) insiders sold a substantial stake in the company which may have sparked shareholders' attention. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Builders FirstSource

Builders FirstSource Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Independent Director, Cory Boydston, for US$3.5m worth of shares, at about US$200 per share. That means that an insider was selling shares at around the current price of US$182. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).

In the last year Builders FirstSource insiders didn't buy any company stock. 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!

I will like Builders FirstSource better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Builders FirstSource Insiders Are Selling The Stock

The last three months saw significant insider selling at Builders FirstSource. Specifically, Independent Director Cory Boydston ditched US$3.5m 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.

Does Builders FirstSource Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Builders FirstSource insiders own 2.1% of the company, currently worth about US$466m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Builders FirstSource Insiders?

An insider sold Builders FirstSource shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. You'd be interested to know, that we found 2 warning signs for Builders FirstSource and we suggest you have a look.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

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 of direct interests only, but not derivative transactions or indirect interests.

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