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 shareholders might well want to know whether insiders have been buying or selling shares in Stryker Corporation (NYSE:SYK).
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, 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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Stryker Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Independent Director, Louise Francesconi, sold US$502k worth of shares at a price of US$187 per share. So we know that an insider sold shares at around the present share price of US$186. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
In total, Stryker 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. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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Stryker Insiders Are Selling The Stock
Over the last three months, we’ve seen notably more insider selling, than insider buying, at Stryker. In total, insiders sold US$883k worth of shares in that time. Meanwhile Independent Director Frederic Doliveux bought US$8.1k worth. Since the selling really does outweigh the buying, we’d say that these transactions may suggest that some insiders feel the shares are not cheap.
Insider Ownership of Stryker
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It’s great to see that Stryker insiders own 12% of the company, worth about US$8.4b. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About Stryker Insiders?
The insider sales have outweighed the insider buying, at Stryker, in the last three months. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. But since Stryker is profitable and growing, we’re not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. Of course, the future is what matters most. So if you are interested in Stryker, you should check out this free report on analyst forecasts for the company.
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If you spot an error that warrants correction, please contact the editor at email@example.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.