Don't Ignore The Insider Selling In Brady

We wouldn't blame Brady Corporation (NYSE:BRC) shareholders if they were a little worried about the fact that Elizabeth Bruno, the Independent Director recently netted about US$1.8m selling shares at an average price of US$74.71. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 2.5%.

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Brady Insider Transactions Over The Last Year

Notably, that recent sale by Elizabeth Bruno is the biggest insider sale of Brady shares that we've seen in the last year. So it's clear an insider wanted to take some cash off the table, even below the current price of US$77.72. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. 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. This single sale was just 2.5% of Elizabeth Bruno's stake.

Brady insiders didn't buy any shares over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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I will like Brady 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.

Insider Ownership Of Brady

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Brady insiders own about US$365m worth of shares (which is 9.9% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Brady Insiders?

An insider hasn't bought Brady 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. On the plus side, Brady makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Brady. At Simply Wall St, we found 1 warning sign for Brady that deserve your attention before buying any shares.

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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.