BJ's Wholesale Club Holdings Insiders Sell US$22m Of Stock, Possibly Signalling Caution

The fact that multiple BJ's Wholesale Club Holdings, Inc. (NYSE:BJ) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

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.

See our latest analysis for BJ's Wholesale Club Holdings

The Last 12 Months Of Insider Transactions At BJ's Wholesale Club Holdings

The insider, Christopher Baldwin, made the biggest insider sale in the last 12 months. That single transaction was for US$5.4m worth of shares at a price of US$74.53 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$80.99. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 30% of Christopher Baldwin's holding.

Over the last year we saw more insider selling of BJ's Wholesale Club Holdings shares, than buying. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

BJ's Wholesale Club Holdings Insiders Are Selling The Stock

There was substantially more insider selling, than buying, of BJ's Wholesale Club Holdings shares over the last three months. In total, insiders sold US$7.7m worth of shares in that time. On the flip side, Independent Director Steven Ortega spent US$199k on purchasing shares (as mentioned above) . Generally this level of net selling might be considered a bit bearish.

Insider Ownership Of BJ's Wholesale Club Holdings

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that BJ's Wholesale Club Holdings insiders own 0.9% of the company, worth about US$99m. 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 BJ's Wholesale Club Holdings Insider Transactions Indicate?

Unfortunately, there has been more insider selling of BJ's Wholesale Club Holdings stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But since BJ's Wholesale Club Holdings is profitable and growing, we're not too worried by this. While insiders do own shares, they don't own a heap, and they have been selling. So we'd only buy after careful consideration. 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. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of BJ's Wholesale Club Holdings.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.