We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Stanley Black & Decker, Inc. (NYSE:SWK).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. 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’.
Stanley Black & Decker Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Jaime Ramirez sold US$918k worth of shares at a price of US$111 per share. That means that an insider was selling shares at slightly below the current price (US$135). Even though it doesn’t necessarily mean anything, that’s certainly not a positive sign, in our book. When an insider sells below the current price, it does tend to make us wonder about the current valuation. Please note, however, that this single sale was just 46.9% of Jaime Ramirez’s stake.
In total, Stanley Black & Decker insiders sold more than they bought over the last year. The average sell price was around US$121. 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 a visual depiction of insider transactions (by 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!
I will like Stanley Black & Decker better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Stanley Black & Decker Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Stanley Black & Decker shares. Specifically, insiders ditched US$551k worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Stanley Black & Decker insiders own 0.2% of the company, worth about US$46m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Stanley Black & Decker Insider Transactions Indicate?
Insiders haven’t bought Stanley Black & Decker stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn’t bring confidence, either. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. We’d think twice before buying! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Stanley Black & Decker.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.