We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell The J. M. Smucker Company (NYSE:SJM), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.
The Last 12 Months Of Insider Transactions At J. M. Smucker
The Chief Legal & Compliance Officer and Secretary, Jeannette Knudsen, made the biggest insider sale in the last 12 months. That single transaction was for US$128k worth of shares at a price of US$107 each. That means that an insider was selling shares at slightly below the current price (US$115). 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don’t know for sure what they think of the stock price. This single sale was just 3.5% of Jeannette Knudsen’s stake.
All up, insiders sold more shares in J. M. Smucker than they bought, over the last year. The chart below shows insider transactions (by 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 Ownership of J. M. Smucker
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It’s great to see that J. M. Smucker insiders own 3.1% of the company, worth about US$408m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The J. M. Smucker Insider Transactions Indicate?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. It’s heartening that insiders own plenty of stock, but we’d like to see more insider buying, since the last year of J. M. Smucker insider transactions don’t fill us with confidence. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing J. M. Smucker.