Need To Know: Sanderson Farms, Inc. (NASDAQ:SAFM) Insiders Have Been Selling Shares

We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Sanderson Farms, Inc. (NASDAQ:SAFM).

What Is Insider Buying?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’

View our latest analysis for Sanderson Farms

Sanderson Farms Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when John Bierbusse sold US$96k worth of shares at a price of US$110 per share. That means that an insider was selling shares at around the current price of US$99.15. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price.

Over the last year, we note insiders sold 2.43k shares worth US$269k. Over the last year we saw more insider selling of Sanderson Farms shares, than buying. They sold for an average price of about US$111. It’s not particularly great to see insiders were selling shares around current prices. Since insiders sell for many reasons, we wouldn’t put too much weight on it. You can see the insider transactions 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!

NasdaqGS:SAFM Insider Trading January 1st 19
NasdaqGS:SAFM Insider Trading January 1st 19

I will like Sanderson Farms better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Sanderson Farms Insiders Are Selling The Stock

The last three months saw some Sanderson Farms insider selling. Independent Director Gail Pittman sold just US$29k worth of shares in that time. It’s not great to see insider selling, nor the lack of recent buyers. But the amount sold isn’t enough for us to put any weight on it.

Does Sanderson Farms Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Sanderson Farms insiders own about US$127m worth of shares (which is 5.8% 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.

So What Does This Data Suggest About Sanderson Farms Insiders?

We note a that there’s been a little more insider selling than buying, recently. But the net divestment is not enough to concern us at all. It’s heartening that insiders own plenty of stock, but we’d like to see more insider buying, since the last year of Sanderson Farms insider transactions don’t fill us with confidence. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Sanderson Farms.

But note: Sanderson Farms 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.

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 editorial-team@simplywallst.com.