Should You Be Worried About Insider Transactions At Neogen Corporation (NASDAQ:NEOG)?

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We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 before you buy or sell Neogen Corporation (NASDAQ:NEOG), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.

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. 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 Neogen

Neogen Insider Transactions Over The Last Year

The Executive Chairman, James Herbert, made the biggest insider sale in the last 12 months. That single transaction was for US$3.2m worth of shares at a price of US$83.52 each. While we don’t usually like to see insider selling, it’s more concerning if the sales take price at a lower price. The good news is that this large sale was at well above current price of US$60.31. So it may not shed much light on insider confidence at current levels.

Over the last year, we can see that insiders have bought 4800 shares worth US$353k. But they sold 407k for US$29m. In total, Neogen insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

NasdaqGS:NEOG Recent Insider Trading, April 30th 2019
NasdaqGS:NEOG Recent Insider Trading, April 30th 2019

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

Neogen Insiders Are Selling The Stock

Over the last three months, we’ve seen significant insider selling at Neogen. In total, insiders dumped US$6.2m worth of shares in that time, and we didn’t record any purchases whatsoever. In light of this it’s hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership of Neogen

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. I reckon it’s a good sign if insiders own a significant number of shares in the company. Insiders own 2.2% of Neogen shares, worth about US$70m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Neogen Tell Us?

Insiders haven’t bought Neogen stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn’t give us much comfort. But since Neogen is profitable and growing, we’re not too worried by this. Insiders own shares, but we’re still pretty cautious, given the history of sales. We’re in no rush to buy! Of course, the future is what matters most. So if you are interested in Neogen, you should check out this free report on analyst forecasts for the company.

Of course Neogen may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.