Have Caterpillar Insiders Been Selling Stock?

Some Caterpillar Inc. (NYSE:CAT) shareholders may be a little concerned to see that the Executive Chairman of the Board, D. Umpleby, recently sold a substantial US$7.1m worth of stock at a price of US$413 per share. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 2.9%.

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Caterpillar Insider Transactions Over The Last Year

In fact, the recent sale by D. Umpleby was the biggest sale of Caterpillar shares made by an insider individual in the last twelve months, according to our records. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of US$420. 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. 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 2.9% of D. Umpleby's holding.

In the last twelve months insiders purchased 675.00 shares for US$229k. But insiders sold 45.88k shares worth US$18m. All up, insiders sold more shares in Caterpillar than they bought, over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for Caterpillar

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Insider Ownership Of Caterpillar

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. Caterpillar insiders own about US$420m worth of shares (which is 0.2% 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.

So What Do The Caterpillar Insider Transactions Indicate?

Insiders sold Caterpillar shares recently, but they didn't buy any. Despite some insider buying, the longer term picture doesn't make us feel much more positive. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. To assist with this, we've discovered 2 warning signs that you should run your eye over to get a better picture of Caterpillar.

Of course Caterpillar may not be the best stock to buy. So you may wish to see this free collection of high quality 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 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.