Don't Ignore The Insider Selling In Builders FirstSource

Some Builders FirstSource, Inc. (NYSE:BLDR) shareholders may be a little concerned to see that the Independent Director, Craig Steinke, recently sold a substantial US$4.6m worth of stock at a price of US$154 per share. That sale reduced their total holding by 24% which is hardly insignificant, but far from the worst we've seen.

Check out our latest analysis for Builders FirstSource

The Last 12 Months Of Insider Transactions At Builders FirstSource

Notably, that recent sale by Craig Steinke is the biggest insider sale of Builders FirstSource shares that we've seen in the last year. So it's clear an insider wanted to take some cash off the table, even below the current price of US$161. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 24% of Craig Steinke's holding.

Insiders in Builders FirstSource didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like Builders FirstSource better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Builders FirstSource insiders own about US$407m worth of shares (which is 2.2% 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 Builders FirstSource Tell Us?

Insiders sold Builders FirstSource shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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. While conducting our analysis, we found that Builders FirstSource has 2 warning signs and it would be unwise to ignore them.

But note: Builders FirstSource 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.