We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Charles River Laboratories International, Inc. (NYSE:CRL).
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
Charles River Laboratories International Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Chairman, James Foster, for US$2.9m worth of shares, at about US$115 per share. That means that an insider was selling shares at slightly below the current price (US$136). 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 9.4% of James Foster's stake.
We note that in the last year insiders divested 36936 shares for a total of US$4.5m. In the last year Charles River Laboratories International insiders didn't buy any company stock. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Charles River Laboratories International better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Charles River Laboratories International Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company 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 Charles River Laboratories International insiders own 1.5% of the company, worth about US$103m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Do The Charles River Laboratories International 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 Charles River Laboratories International insider transactions don't fill us with confidence. Of course, the future is what matters most. So if you are interested in Charles River Laboratories International, you should check out this free report on analyst forecasts for the company.
But note: Charles River Laboratories International 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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.