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 Wyndham Destinations, Inc. (NYSE:WYND), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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 Wyndham Destinations
In the last twelve months, the biggest single sale by an insider was when the Non-Executive Chairman of the Board, Stephen Holmes, sold US$3.6m worth of shares at a price of US$37.18 per share. That means that an insider was selling shares at around the current price of US$31.41. While we don’t usually like to see insider selling, it’s more concerning if the sales take place at a lower price. We note that this sale took place at around the current price, so it isn’t a major concern, though it’s hardly a good sign.
Happily, we note that in the last year insiders paid US$598k for 21.03k shares. But they sold 117.72k shares for US$4.4m. All up, insiders sold more shares in Wyndham Destinations than they bought, over the last year. They sold for an average price of about US$37.40. It’s not too encouraging to see that insiders have sold at below the current price. But we wouldn’t put too much weight on the insider selling. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Wyndham Destinations Insiders Are Selling The Stock
We’ve seen more insider selling than insider buying at Wyndham Destinations recently. In that time, insiders dumped US$3.7m worth of shares. Meanwhile CEO, President & Director Michael Brown bought US$100k worth. Because the selling vastly outweighs the buying, we’d say this is a somewhat bearish sign.
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. We usually like to see fairly high levels of insider ownership. Wyndham Destinations insiders own about US$35m worth of shares. That equates to 1.3% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Wyndham Destinations Tell Us?
The insider sales have outweighed the insider buying, at Wyndham Destinations, in the last three months. Zooming out, the longer term picture doesn’t give us much comfort. Insiders own shares, but we’re still pretty cautious, given the history of sales. We’re in no rush to buy! So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. At Simply Wall St, we’ve found that Wyndham Destinations has 4 warning signs (1 doesn’t sit too well with us!) that deserve your attention before going any further with your analysis.
Of course Wyndham Destinations 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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