While Signet Jewelers Limited (NYSE:SIG) shareholders have had a good week with the stock up 5.1%, they shouldn't let their guards down. The fact that insiders chose to dispose of US$1.2m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
Check out our latest analysis for Signet Jewelers
Signet Jewelers Insider Transactions Over The Last Year
The Chief Supply Chain Officer, Stephen Lovejoy, made the biggest insider sale in the last 12 months. That single transaction was for US$574k worth of shares at a price of US$57.37 each. That means that an insider was selling shares at slightly below the current price (US$71.49). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 24% of Stephen Lovejoy's holding.
Insiders in Signet Jewelers didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Does Signet Jewelers 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. We usually like to see fairly high levels of insider ownership. Insiders own 2.7% of Signet Jewelers shares, worth about US$89m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Signet Jewelers Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Signet Jewelers shares in the last quarter. Our analysis of Signet Jewelers insider transactions leaves us cautious. But it's good to see that insiders own shares in the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 2 warning signs for Signet Jewelers you should be aware of.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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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