A number of Valvoline Inc. (NYSE:VVV) insiders sold their shares in the last year, which may have raised concerns among investors. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for Valvoline
The Last 12 Months Of Insider Transactions At Valvoline
Notably, that recent sale by Julie O'Daniel is the biggest insider sale of Valvoline shares that we've seen in the last year. So it's clear an insider wanted to take some cash off the table, even below the current price of US$35.63. 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. 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. We note that the biggest single sale was only 31%of Julie O'Daniel's holding.
Over the last year, we can see that insiders have bought 22.34k shares worth US$756k. But they sold 22.65k shares for US$773k. All up, insiders sold more shares in Valvoline than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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).
Insiders At Valvoline Have Sold Stock Recently
There was substantially more insider selling, than buying, of Valvoline shares over the last three months. In that time, insiders dumped US$380k worth of shares. Meanwhile Independent Director Charles Sonsteby bought US$154k worth. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
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. Valvoline insiders own about US$29m worth of shares. That equates to 0.6% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Valvoline Tell Us?
The stark truth for Valvoline is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But since Valvoline is profitable and growing, we're not too worried by this. While insiders do own shares, they don't own a heap, and they have been selling. So we'd only buy after careful consideration. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Be aware that Valvoline is showing 4 warning signs in our investment analysis, and 3 of those are a bit unpleasant...
But note: Valvoline 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 of direct interests only, but not derivative transactions or indirect interests.
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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.