Favorable turn of events for Yellow Corporation (NASDAQ:YELL) insiders who've lost US$390k to date on a US$1.1m purchase

By
Simply Wall St
Published
March 22, 2022
NasdaqGS:YELL
Source: Shutterstock

Insiders who bought US$1.1m worth of Yellow Corporation (NASDAQ:YELL) stock in the last year have seen some of their losses recouped as the stock gained 13% last week. The purchase, however, has proven to be a pricey bet, with losses currently totalling US$390k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Yellow

Yellow Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Independent Chairman Matthew Doheny bought US$408k worth of shares at a price of US$13.15 per share. That means that an insider was happy to buy shares at above the current price of US$8.05. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

Yellow insiders may have bought shares in the last year, but they didn't sell any. 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
NasdaqGS:YELL Insider Trading Volume March 22nd 2022

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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. It appears that Yellow insiders own 3.1% of the company, worth about US$13m. 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 Yellow Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. Overall we don't see anything to make us think Yellow insiders are doubting the company, and they do own shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Yellow. To help with this, we've discovered 3 warning signs (1 is significant!) that you ought to be aware of before buying any shares in Yellow.

Of course Yellow 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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