Insiders At A. O. Smith Sold US$2.4m In Stock, Alluding To Potential Weakness

Many A. O. Smith Corporation (NYSE:AOS) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. 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, if numerous insiders are selling, shareholders should investigate more.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for A. O. Smith

The Last 12 Months Of Insider Transactions At A. O. Smith

Over the last year, we can see that the biggest insider sale was by the Executive VP, James Stern, for US$1.2m worth of shares, at about US$73.00 per share. That means that an insider was selling shares at slightly below the current price (US$85.74). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 12% of James Stern's holding.

In the last year A. O. Smith insiders didn't buy any company stock. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

A. O. Smith Insiders Are Selling The Stock

The last three months saw significant insider selling at A. O. Smith. In total, Independent Presiding Director Ronald Brown sold US$311k 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.

Insider Ownership Of A. O. Smith

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. A. O. Smith insiders own about US$114m worth of shares (which is 0.9% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At A. O. Smith Tell Us?

An insider hasn't bought A. O. Smith stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. On the plus side, A. O. Smith makes money, and is growing profits. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. Therefore, you should definitely take a look at this FREE report showing analyst forecasts for A. O. Smith.

But note: A. O. Smith may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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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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.