Insiders who sold Sonoco Products Company (NYSE:SON) earlier this year probably made the right call as market cap dropped by US$310m

By
Simply Wall St
Published
September 13, 2021
NYSE:SON
Source: Shutterstock

By selling US$490k worth of Sonoco Products Company (NYSE:SON) stock at an average sell price of US$67.95 over the last year, insiders seemed to have made the most of their holdings. The company’s market cap plunged by US$310m after price dropped by 4.8% last week but insiders were able to limit their loss to an extent.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Sonoco Products

Sonoco Products Insider Transactions Over The Last Year

The Executive Vice President of Global Industrial & Consumer, Rodger Fuller, made the biggest insider sale in the last 12 months. That single transaction was for US$490k worth of shares at a price of US$67.97 each. That means that an insider was selling shares at around the current price of US$62.87. 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. Rodger Fuller was the only individual insider to sell over the last year.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NYSE:SON Insider Trading Volume September 13th 2021

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insider Ownership of Sonoco Products

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. Sonoco Products insiders own about US$56m worth of shares. That equates to 0.9% 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.

What Might The Insider Transactions At Sonoco Products Tell Us?

It doesn't really mean much that no insider has traded Sonoco Products shares in the last quarter. We don't take much encouragement from the transactions by Sonoco Products insiders. The modest level of insider ownership is, at least, some comfort. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 2 warning signs with Sonoco Products and understanding these should be part of your investment process.

Of course Sonoco Products 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, but not derivative transactions.

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