As The Middleby Corporation's (NASDAQ:MIDD)) market cap dropped by US$747m, insiders who sold US$2.9m worth of stock were able to offset their losses

By
Simply Wall St
Published
April 09, 2022
NasdaqGS:MIDD
Source: Shutterstock

Over the past year, insiders sold US$2.9m worth of The Middleby Corporation (NASDAQ:MIDD) stock at an average price of US$176 per share allowing them to get the most out of their money. The company’s market cap plunged by US$747m after price dropped by 8.5% last week but insiders were able to limit their loss to an extent.

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.

View our latest analysis for Middleby

Middleby Insider Transactions Over The Last Year

The Chief Technology & Operations Officer, James Pool, made the biggest insider sale in the last 12 months. That single transaction was for US$711k worth of shares at a price of US$179 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of US$148. So it may not shed much light on insider confidence at current levels.

Over the last year we saw more insider selling of Middleby 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!

insider-trading-volume
NasdaqGS:MIDD Insider Trading Volume April 9th 2022

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Middleby Insiders Are Selling The Stock

There was substantially more insider selling, than buying, of Middleby shares over the last three months. In that time, Independent Director John Miller dumped US$461k worth of shares. On the other hand we note Independent Director Robert Nerbonne bought US$101k worth of shares. We don't view these transactions as a positive sign.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Middleby insiders own 1.0% of the company, worth about US$79m. 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 Middleby Tell Us?

The stark truth for Middleby is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But since Middleby is profitable and growing, we're not too worried by this. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 3 warning signs for Middleby (1 makes us a bit uncomfortable!) that we believe deserve your full attention.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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