Insiders At Costco Wholesale Sold US$28m In Stock, Alluding To Potential Weakness

Over the past year, many Costco Wholesale Corporation (NASDAQ:COST) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Our free stock report includes 1 warning sign investors should be aware of before investing in Costco Wholesale. Read for free now.

The Last 12 Months Of Insider Transactions At Costco Wholesale

Over the last year, we can see that the biggest insider sale was by the insider, James Klauer, for US$3.9m worth of shares, at about US$981 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$1,026. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 8.3% of James Klauer's holding.

In the last year Costco Wholesale insiders didn't buy any company stock. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

View our latest analysis for Costco Wholesale

I will like Costco Wholesale 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.

Costco Wholesale Insiders Are Selling The Stock

The last three months saw significant insider selling at Costco Wholesale. In total, insiders sold US$9.9m 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.

Does Costco Wholesale Boast High 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. Costco Wholesale insiders own 0.2% of the company, currently worth about US$781m based on the recent share price. 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 Costco Wholesale Insider Transactions Indicate?

Insiders sold Costco Wholesale shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. But since Costco Wholesale is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 1 warning sign for Costco Wholesale you should know about.

But note: Costco Wholesale may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.