We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Fastenal Company (NASDAQ:FAST).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
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. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Fastenal
Independent Director Michael Dolan made the biggest insider sale in the last 12 months. That single transaction was for US$300k worth of shares at a price of US$60.00 each. So we know that an insider sold shares at around the present share price of US$52.00. While their view may have changed since the sale, this is not a particularly positive fact. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment. Michael Dolan was the only individual insider to sell shares in the last twelve months.
Happily, we note that in the last year insiders paid US$511k for 9.95k shares. But they sold 5.00k for US$300k. In total, Fastenal insiders bought more than they sold over the last year. The average buy price was around US$51.38. Although they bought at below the recent price of US$52.00 per share, it is good to see that insiders are willing to invest in the company. The chart below shows insider transactions over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like Fastenal better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Have Fastenal Insiders Traded Recently?
We saw insider selling worth US$300k in the last three months. But that was only a smidgen more than the US$300k worth of buying. Ultimately the overall selling isn’t enough to tell us much.
Does Fastenal Boast High Insider Ownership?
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. Fastenal insiders own 0.3% of the company, currently worth about US$42m 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 Fastenal Insiders?
Our data shows a little more insider buying than selling in the last three months. But the net investment is not enough to encourage us much. However, our analysis of transactions over the last year is heartening. Overall we don’t see anything to make us think Fastenal insiders are doubting the company, and they do own shares. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course Fastenal may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.