Stock Analysis

Executive Chairman of the Board Of Commercial Metals Sold 26% Of Their Shares

Published
NYSE:CMC
Source: Shutterstock

We wouldn't blame Commercial Metals Company (NYSE:CMC) shareholders if they were a little worried about the fact that Barbara Smith, the Executive Chairman of the Board recently netted about US$7.1m selling shares at an average price of US$49.89. That sale reduced their total holding by 26% which is hardly insignificant, but far from the worst we've seen.

View our latest analysis for Commercial Metals

Commercial Metals Insider Transactions Over The Last Year

Notably, that recent sale by Barbara Smith is the biggest insider sale of Commercial Metals shares that we've seen in the last year. That means that an insider was selling shares at below the current price (US$49.90). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. 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 26% of Barbara Smith's stake.

All up, insiders sold more shares in Commercial Metals than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
NYSE:CMC Insider Trading Volume January 20th 2024

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

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Commercial Metals insiders own about US$56m worth of shares. That equates to 1.0% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Commercial Metals Insiders?

The insider sales have outweighed the insider buying, at Commercial Metals, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. While insiders do own shares, they don't own a heap, and they have been selling. We're in no rush to buy! While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For example, Commercial Metals has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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 of direct interests only, but not derivative transactions or indirect interests.

Valuation is complex, but we're helping make it simple.

Find out whether Commercial Metals is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis