Don't Ignore The Insider Selling In Generac Holdings

We wouldn't blame Generac Holdings Inc. (NYSE:GNRC) shareholders if they were a little worried about the fact that Rajendra Kanuru, the Executive VP recently netted about US$585k selling shares at an average price of US$184. That sale reduced their total holding by 23% which is hardly insignificant, but far from the worst we've seen.

Check out our latest analysis for Generac Holdings

The Last 12 Months Of Insider Transactions At Generac Holdings

In fact, the recent sale by Rajendra Kanuru was the biggest sale of Generac Holdings 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 below the current price of US$195. 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. 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 23% of Rajendra Kanuru's holding.

In the last year Generac Holdings insiders didn't buy any company stock. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Insider Ownership Of Generac Holdings

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. It's great to see that Generac Holdings insiders own 1.6% of the company, worth about US$184m. 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 Generac Holdings Insider Transactions Indicate?

An insider hasn't bought Generac Holdings stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. But since Generac Holdings is profitable and growing, we're not too worried by this. 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 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. In terms of investment risks, we've identified 2 warning signs with Generac Holdings and understanding them should be part of your investment process.

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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.