Many The Home Depot, Inc. (NYSE:HD) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, if numerous insiders are selling, shareholders should investigate more.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At Home Depot
Over the last year, we can see that the biggest insider sale was by the Executive VP, Teresa Roseborough, for US$1.6m worth of shares, at about US$329 per share. That means that even when the share price was below the current price of US$350, an insider wanted to cash in some shares. 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 20% of Teresa Roseborough's holding.
Insiders in Home Depot didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Home Depot better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Home Depot Insiders Are Selling The Stock
The last three months saw some Home Depot insider selling. Executive Vice President of U.S. Stores & International Operations Ann-Marie Campbell only netted US$32k selling shares, in that period. Neither the lack of buying nor the presence of selling is heartening. But the volume sold is so low that it really doesn't bother us.
Insider Ownership of Home Depot
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. Home Depot insiders own about US$236m worth of shares (which is 0.06% 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 Does This Data Suggest About Home Depot Insiders?
While there has not been any insider buying in the last three months, there has been selling. But given the selling was modest, we're not worried. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Home Depot insider transactions don't fill us with confidence. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example - Home Depot has 1 warning sign we think you should be aware of.
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, but not derivative transactions.
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