Stock Analysis

Need To Know: Masonite International Corporation (NYSE:DOOR) Insiders Have Been Selling Shares

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NYSE:DOOR
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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Masonite International Corporation (NYSE:DOOR), you may well want to know whether insiders have been buying or selling.

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

See our latest analysis for Masonite International

Masonite International Insider Transactions Over The Last Year

The Independent Chairman of the Board, Robert Byrne, made the biggest insider sale in the last 12 months. That single transaction was for US$1.0m worth of shares at a price of US$88.41 each. That means that an insider was selling shares at slightly below the current price (US$98.33). 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. This single sale was just 26% of Robert Byrne's stake.

Masonite International insiders didn't buy any shares 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!

insider-trading-volume
NYSE:DOOR Insider Trading Volume November 23rd 2020

I will like Masonite International better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Masonite International Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Masonite International. Specifically, insiders ditched US$771k 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.

Does Masonite International Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 1.3% of Masonite International shares, worth about US$31m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Masonite International Tell Us?

Insiders haven't bought Masonite International 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. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. 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 3 warning signs for Masonite International and we suggest you have a look.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.

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About NYSE:DOOR

Masonite International

Masonite International Corporation designs, manufactures, markets, and distributes interior and exterior doors for the new construction and repair, renovation, and remodeling sectors of the residential and non-residential building construction markets worldwide.

Undervalued with mediocre balance sheet.