We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Dollar General Corporation (NYSE:DG), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
The Last 12 Months Of Insider Transactions At Dollar General
The Executive VP & General Counsel, Rhonda Taylor, made the biggest insider sale in the last 12 months. That single transaction was for US$2.0m worth of shares at a price of US$207 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$229. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 28% of Rhonda Taylor's holding.
Insiders in Dollar General didn't buy any shares in 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!
I will like Dollar General better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders at Dollar General Have Sold Stock Recently
The last three months saw significant insider selling at Dollar General. Specifically, Executive VP & General Counsel Rhonda Taylor ditched US$2.0m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Dollar General insiders own 0.2% of the company, currently worth about US$119m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Dollar General Tell Us?
An insider sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. But since Dollar General is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Dollar General. To assist with this, we've discovered 2 warning signs that you should run your eye over to get a better picture of Dollar General.
Of course Dollar General 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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