It is not uncommon to see companies perform well in the years after insiders buy shares. 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 we'll take a look at whether insiders have been buying or selling shares in Wyndham Hotels & Resorts, Inc. (NYSE:WH).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
The Last 12 Months Of Insider Transactions At Wyndham Hotels & Resorts
In the last twelve months, the biggest single sale by an insider was when the Non-Executive Chairman, Stephen Holmes, sold US$4.9m worth of shares at a price of US$49.82 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$64.71. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 13% of Stephen Holmes's stake.
In the last twelve months insiders purchased 30.00k shares for US$1.4m. On the other hand they divested 143.45k shares, for US$7.2m. Over the last year we saw more insider selling of Wyndham Hotels & Resorts 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Wyndham Hotels & Resorts Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Wyndham Hotels & Resorts shares. Specifically, President of Americas Scott Lepage ditched US$92k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Does Wyndham Hotels & Resorts Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Wyndham Hotels & Resorts insiders own about US$67m worth of shares. That equates to 1.1% of the company. 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 Does This Data Suggest About Wyndham Hotels & Resorts Insiders?
An insider sold Wyndham Hotels & Resorts shares recently, but they didn't buy any. Despite some insider buying, the longer term picture doesn't make us feel much more positive. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For instance, we've identified 2 warning signs for Wyndham Hotels & Resorts (1 shouldn't be ignored) you should be aware of.
But note: Wyndham Hotels & Resorts 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, but not derivative transactions.
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