Over the past year, many International Paper Company (NYSE:IP) insiders sold a significant stake in the company which may have piqued investors' interest. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, if numerous insiders are selling, shareholders should investigate more.
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 International Paper
The Last 12 Months Of Insider Transactions At International Paper
The Chairman & CEO, Mark Sutton, made the biggest insider sale in the last 12 months. That single transaction was for US$2.9m worth of shares at a price of US$34.58 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$36.69. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 11% of Mark Sutton's holding.
International Paper insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
International Paper Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at International Paper. Specifically, Senior Vice President of Human Resources & Corporate Affairs Thomas Plath ditched US$153k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership Of International Paper
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. Insiders own 0.4% of International Paper shares, worth about US$52m. 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 International Paper Tell Us?
An insider hasn't bought International Paper stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 2 warning signs with International Paper and understanding them should be part of your investment process.
Of course International Paper may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.