It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
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BJ’s Wholesale Club Holdings Insider Transactions Over The Last Year
Chairman Christopher Baldwin made the biggest insider sale in the last 12 months. That single transaction was for US$7.6m worth of shares at a price of US$25.09 each. That means that an insider was selling shares at slightly below the current price (US$26.59). While their view may have changed since they sold, this isn’t a particularly bullish sign. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price. Please note, however, that this single sale was just 19.9% of Christopher Baldwin’s stake.
In total, BJ’s Wholesale Club Holdings insiders sold more than they bought over the last year. The sellers received a price of around US$25.09, on average. We don’t gain confidence from insider selling below the recent share price. But we wouldn’t put too much weight on the insider selling. You can see the insider transactions (by 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!
I will like BJ’s Wholesale Club Holdings better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does BJ’s Wholesale Club Holdings Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. BJ’s Wholesale Club Holdings insiders own about US$110m worth of shares (which is 3.0% 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.
What Might The Insider Transactions At BJ’s Wholesale Club Holdings Tell Us?
The fact that there have been no BJ’s Wholesale Club Holdings insider transactions recently certainly doesn’t bother us. While we feel good about high insider ownership of BJ’s Wholesale Club Holdings, we can’t say the same about the selling of shares. 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, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 email@example.com.