We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Dillard’s, Inc. (NYSE:DDS), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
Dillard’s Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Michael McNiff sold US$933k worth of shares at a price of US$93.31 per share. That is hardly a positive sign, even though it took place above the latest price (US$64.79). So it may not tell us anything about how insiders feel about the current share price.
Over the last year, we can see that insiders have bought 11.00k shares worth US$840k. On the other hand they divested 18.85k shares, for US$1.7m. All up, insiders sold more shares in Dillard’s than they bought, over the last year. The average sell price was around US$89.18. It is certainly not great to see that insiders have sold shares in the company. But the selling was at much higher prices than the current share price (US$64.79), so it probably doesn’t tell us a lot about the value on offer today. You can see the insider transactions over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Does Dillard’s Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Dillard’s insiders own about US$277m worth of shares (which is 16% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Dillard’s Insider Transactions Indicate?
It doesn’t really mean much that no insider has traded Dillard’s shares in the last quarter. Our analysis of Dillard’s insider transactions leaves us cautious. But it’s good to see that insiders own shares in the company. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.