Possible Bearish Signals With Croda International Insiders Disposing Stock

Quite a few Croda International Plc (LON:CRDA) insiders sold their shares over the past year, which may be a cause for concern. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Croda International

The Last 12 Months Of Insider Transactions At Croda International

In the last twelve months, the biggest single sale by an insider was when the insider, Nicholas Challoner, sold UK£334k worth of shares at a price of UK£49.20 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of UK£40.04. So it is hard to draw any strong conclusion from it.

Happily, we note that in the last year insiders paid UK£109k for 2.32k shares. But they sold 19.58k shares for UK£952k. Over the last year we saw more insider selling of Croda International shares, than buying. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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Croda International Insiders Are Selling The Stock

We've seen more insider selling than insider buying at Croda International recently. In total, Group General Counsel Thomas Brophy sold UK£248k worth of shares in that time. On the other hand we note Group General Counsel Thomas Brophy bought UK£40k worth of shares. We don't view these transactions as a positive sign.

Insider Ownership Of Croda International

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. It appears that Croda International insiders own 0.3% of the company, worth about UK£15m. 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 Croda International Insider Transactions Indicate?

The insider sales have outweighed the insider buying, at Croda International, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. You'd be interested to know, that we found 2 warning signs for Croda International and we suggest you have a look.

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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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com