For MSC Industrial Direct Co., Inc. (NYSE:MSM) insiders, selling US$715k worth of stock earlier this year was a smart move.

By
Simply Wall St
Published
May 19, 2022
NYSE:MSM
Source: Shutterstock

MSC Industrial Direct Co., Inc.'s (NYSE:MSM) stock rose 4.7% last week, but insiders who sold US$715k worth of stock over the last year are probably in a more advantageous position. Holding on to stock would have meant their investment would be worth less now than it was at the time of sale. Thus selling at an average price of US$85.09, which is higher than the current price, may have been the best decision.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for MSC Industrial Direct

The Last 12 Months Of Insider Transactions At MSC Industrial Direct

Notably, that recent purchase by Mitchell Jacobson is the biggest insider purchase of MSC Industrial Direct shares that we've seen in the last year. That means that an insider was happy to buy shares at around the current price of US$82.66. That means they have been optimistic about the company in the past, though they may have changed their mind. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. In this case we're pleased to report that the insider bought shares at close to current prices. Mitchell Jacobson was the only individual insider to buy shares in the last twelve months.

All up, insiders sold more shares in MSC Industrial Direct 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. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
NYSE:MSM Insider Trading Volume May 19th 2022

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

MSC Industrial Direct Insiders Are Selling The Stock

We've seen more insider selling than insider buying at MSC Industrial Direct recently. In that time, insiders dumped US$465k worth of shares. Meanwhile Non-Executive Chairman Mitchell Jacobson bought US$369k worth , as we said above . Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.

Does MSC Industrial Direct 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. It's great to see that MSC Industrial Direct insiders own 17% of the company, worth about US$802m. 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 MSC Industrial Direct Insider Transactions Indicate?

The stark truth for MSC Industrial Direct is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But it is good to see that MSC Industrial Direct is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. 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. Every company has risks, and we've spotted 3 warning signs for MSC Industrial Direct (of which 1 is concerning!) you should know about.

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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