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 before you buy or sell Waste Management, Inc. (NYSE:WM), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
See our latest analysis for Waste Management
Waste Management Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Senior Vice President of Field Operations Jeff Harris for US$4.4m worth of shares, at about US$86.58 per share. That means that even when the share price was below the current price of US$87.95, an insider wanted to cash in some shares. While sellers have a variety of reasons for selling, this isn’t particularly great to see. As a general rule we consider it to be discouraging when insiders are selling below the current price. Please note, however, that this single sale was just 39.9% of Jeff Harris’s stake.
In the last twelve months insiders netted US$10m for 117.59k shares sold. All up, insiders sold more shares in Waste Management than they bought, over the last year. They sold for an average price of about US$86.56. We don’t gain much confidence from insider selling near the recent share price. Since insiders sell for many reasons, we wouldn’t put too much weight on it. The chart below shows insider transactions 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!
I will like Waste Management better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Waste Management Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at Waste Management. Specifically, Jeff Harris ditched US$2.2m worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
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. I reckon it’s a good sign if insiders own a significant number of shares in the company. It’s great to see that Waste Management insiders own 0.2% of the company, worth about US$85m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At Waste Management Tell Us?
An insider sold Waste Management shares recently, but they didn’t buy any. And there weren’t any purchases to give us comfort, over the last year. But it is good to see that Waste Management is growing earnings. While insiders do own shares, they don’t own a heap, and they have been selling. We’d think twice before buying! Of course, the future is what matters most. So if you are interested in Waste Management, you should check out this free report on analyst forecasts for the company.
Of course Waste Management may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.