Louisiana-Pacific Insiders Sell US$3.9m Of Stock, Possibly Signalling Caution

The fact that multiple Louisiana-Pacific Corporation (NYSE:LPX) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Louisiana-Pacific

Louisiana-Pacific Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Chairman & CEO, William Southern, for US$3.0m worth of shares, at about US$93.44 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$97.05. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 5.7% of William Southern's holding.

Insiders in Louisiana-Pacific didn't buy any shares in the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like Louisiana-Pacific better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insiders At Louisiana-Pacific Have Sold Stock Recently

The last quarter saw substantial insider selling of Louisiana-Pacific shares. In total, insiders dumped US$3.1m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Does Louisiana-Pacific Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Louisiana-Pacific insiders own about US$100m worth of shares. That equates to 1.5% 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 Do The Louisiana-Pacific Insider Transactions Indicate?

Insiders haven't bought Louisiana-Pacific stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. On the plus side, Louisiana-Pacific makes money, and is growing profits. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We'd practice some caution before buying! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Louisiana-Pacific. You'd be interested to know, that we found 1 warning sign for Louisiana-Pacific and we suggest you have a look.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.