Don't Ignore The Insider Selling In Steel Dynamics

Some Steel Dynamics, Inc. (NASDAQ:STLD) shareholders may be a little concerned to see that the Senior Vice President of Aluminum Group, Miguel Alvarez, recently sold a substantial US$1.3m worth of stock at a price of US$163 per share. However, that sale only accounted for 7.9% of their holding, so arguably it doesn't say much about their conviction.

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Steel Dynamics Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Consultant, Glenn Pushis, for US$3.2m worth of shares, at about US$135 per share. That means that even when the share price was below the current price of US$157, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 19% of Glenn Pushis's holding.

Steel Dynamics insiders didn't buy any shares over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

See our latest analysis for Steel Dynamics

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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. It's great to see that Steel Dynamics insiders own 6.5% of the company, worth about US$1.5b. 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 Steel Dynamics Insiders?

An insider sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 1 warning sign for Steel Dynamics you should be aware of.

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

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.