Have Caterpillar Insiders Been Selling Stock?

We wouldn't blame Caterpillar Inc. (NYSE:CAT) shareholders if they were a little worried about the fact that Andrew R. Bonfield, the Chief Financial Officer recently netted about US$5.7m selling shares at an average price of US$571. That's a big disposal, and it decreased their holding size by 15%, which is notable but not too bad.

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The Last 12 Months Of Insider Transactions At Caterpillar

Over the last year, we can see that the biggest insider sale was by the Executive Chairman of the Board, D. Umpleby, for US$8.7m worth of shares, at about US$505 per share. That means that even when the share price was below the current price of US$597, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 3.1% of D. Umpleby's holding.

Over the last year, we can see that insiders have bought 875.00 shares worth US$359k. But they sold 77.45k shares for US$36m. All up, insiders sold more shares in Caterpillar than they bought, over the last year. The sellers received a price of around US$461, on average. It's not too encouraging to see that insiders have sold at below the current price. Since insiders sell for many reasons, we wouldn't put too much weight on it. 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!

Check out our latest analysis for Caterpillar

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Does Caterpillar Boast High Insider Ownership?

Many investors like to check how much of a company is owned by 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 0.2% of the company, currently worth about US$536m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Caterpillar Insider Transactions Indicate?

The stark truth for Caterpillar is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. You'd be interested to know, that we found 2 warning signs for Caterpillar and we suggest you have a look.

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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.