We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Royal Caribbean Cruises Ltd. (NYSE:RCL), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Royal Caribbean Cruises Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the President & CEO of Royal Caribbean International, Michael Bayley, for US$2.4m worth of shares, at about US$118 per share. So we know that an insider sold shares at around the present share price of US$113. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
Over the last year, we can see that insiders have bought 19320 shares worth US$2.0m. But they sold 77859 for US$9.3m. In total, Royal Caribbean Cruises insiders sold more than they bought over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Royal Caribbean Cruises better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insider Ownership of Royal Caribbean Cruises
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. Royal Caribbean Cruises insiders own 1.1% of the company, currently worth about US$255m based on the recent share price. 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 Royal Caribbean Cruises Insiders?
It doesn't really mean much that no insider has traded Royal Caribbean Cruises shares in the last quarter. It's great to see high levels of insider ownership, but looking back at the last year, we don't gain confidence from the Royal Caribbean Cruises insiders selling. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Royal Caribbean Cruises.
But note: Royal Caribbean Cruises 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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.