Acuity Brands Insiders Sell US$3.8m Of Stock, Possibly Signalling Caution

Over the past year, many Acuity Brands, Inc. (NYSE:AYI) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Acuity Brands

The Last 12 Months Of Insider Transactions At Acuity Brands

The Senior VP & Chief Human Resources Officer, Dianne Mills, made the biggest insider sale in the last 12 months. That single transaction was for US$1.4m worth of shares at a price of US$226 each. That means that even when the share price was below the current price of US$300, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was 73% of Dianne Mills's holding.

All up, insiders sold more shares in Acuity Brands than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Acuity Brands Insiders Are Selling The Stock

The last three months saw significant insider selling at Acuity Brands. In total, Senior VP & General Counsel Barry Goldman dumped US$907k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Insiders own 0.3% of Acuity Brands shares, worth about US$31m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Acuity Brands Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. Zooming out, the longer term picture doesn't give us much comfort. But since Acuity Brands is profitable and growing, we're not too worried by this. While insiders do own shares, they don't own a heap, and they have been selling. We'd practice some caution before buying! 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. In terms of investment risks, we've identified 1 warning sign with Acuity Brands and understanding this should be part of your investment process.

But note: Acuity Brands 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.

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

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.