Insiders at The Home Depot, Inc. (NYSE:HD) sold US$9.6m worth of stock, possibly indicating weakness in the future
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. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for Home Depot
The Last 12 Months Of Insider Transactions At Home Depot
In the last twelve months, the biggest single sale by an insider was when the Executive Vice President of Customer Experience, Matthew Carey, sold US$4.0m worth of shares at a price of US$316 per share. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of US$320. 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. We note that the biggest single sale was only 27% of Matthew Carey's holding.
Over the last year, we can see that insiders have bought 3.08k shares worth US$932k. But they sold 30.41k shares for US$9.6m. In total, Home Depot insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. 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).
Home Depot Insiders Are Selling The Stock
We've seen more insider selling than insider buying at Home Depot recently. In total, insiders sold US$5.3m worth of shares in that time. On the other hand we note Independent Director Paula Santilli bought US$500k worth of shares. Generally this level of net selling might be considered a bit bearish.
Does Home Depot Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Home Depot insiders own about US$232m worth of shares (which is 0.07% 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?
Unfortunately, there has been more insider selling of Home Depot stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But it is good to see that Home Depot is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. While conducting our analysis, we found that Home Depot has 2 warning signs and it would be unwise to ignore them.
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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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