Exponent Insiders Sold US$10m Of Shares Suggesting Hesitancy

The fact that multiple Exponent, Inc. (NASDAQ:EXPO) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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Exponent Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Executive VP, Richard Schlenker, sold US$6.2m worth of shares at a price of US$107 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$78.28). So it may not tell us anything about how insiders feel about the current share price.

In the last twelve months insiders purchased 296.00 shares for US$28k. But they sold 96.21k shares for US$10m. Over the last year we saw more insider selling of Exponent shares, than buying. The average sell price was around US$104. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is US$78.28). The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

Check out our latest analysis for Exponent

I will like Exponent better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Exponent Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Exponent. Specifically, insider Richard Reiss ditched US$149k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. 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 1.1% of Exponent shares, worth about US$44m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Exponent Tell Us?

An insider sold stock recently, but they haven't been buying. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But it is good to see that Exponent is growing earnings. While insiders do own shares, they don't own a heap, and they have been selling. We'd practice some caution before buying! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

Of course Exponent may not be the best stock to buy. So you may wish to see this free collection of high quality 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 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.