Anyone interested in Darden Restaurants, Inc. (NYSE:DRI) should probably be aware that the Independent Director, Nana Mensah, recently divested US$128k worth of shares in the company, at an average price of US$128 each. Equally important, that sale actually reduced their holding by a full 93% which hardly makes us feel bullish about the stock.
The Last 12 Months Of Insider Transactions At Darden Restaurants
In the last twelve months, the biggest single sale by an insider was when the Non-Executive Chairman, Eugene Lee, sold US$5.2m worth of shares at a price of US$125 per share. That means that an insider was selling shares at slightly below the current price (US$133). 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. This single sale was just 16% of Eugene Lee's stake.
Happily, we note that in the last year insiders paid US$1.4m for 11.93k shares. On the other hand they divested 43.01k shares, for US$5.4m. Over the last year we saw more insider selling of Darden Restaurants shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insider Ownership
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Darden Restaurants insiders own about US$73m worth of shares. That equates to 0.4% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Darden Restaurants Tell Us?
Insiders sold stock recently, but they haven't been buying. Zooming out, the longer term picture doesn't give us much comfort. On the plus side, Darden Restaurants makes money, and is growing profits. Insiders own shares, but we're still pretty cautious, given the history of sales. We're in no rush to buy! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Darden Restaurants. Case in point: We've spotted 2 warning signs for Darden Restaurants you should be aware of.
But note: Darden Restaurants may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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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