Don't Ignore The Insider Selling In Bright Horizons Family Solutions

We wouldn't blame Bright Horizons Family Solutions Inc. (NYSE:BFAM) shareholders if they were a little worried about the fact that Elizabeth Boland, the Chief Financial Officer recently netted about US$651k selling shares at an average price of US$130. However, that sale only accounted for 6.9% of their holding, so arguably it doesn't say much about their conviction.

Check out our latest analysis for Bright Horizons Family Solutions

The Last 12 Months Of Insider Transactions At Bright Horizons Family Solutions

In the last twelve months, the biggest single sale by an insider was when the CEO, President & Director, Stephen Kramer, sold US$1.4m worth of shares at a price of US$140 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of US$124. So it is hard to draw any strong conclusion from it.

Insiders in Bright Horizons Family Solutions didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

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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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 0.8% of Bright Horizons Family Solutions shares, worth about US$58m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Bright Horizons Family Solutions Insiders?

An insider sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. But it is good to see that Bright Horizons Family Solutions is growing earnings. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. 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. In terms of investment risks, we've identified 2 warning signs with Bright Horizons Family Solutions and understanding these should be part of your investment process.

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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.