We wouldn't blame Caterpillar Inc. (NYSE:CAT) shareholders if they were a little worried about the fact that Andrew R. Bonfield, the Chief Financial Officer recently netted about US$6.4m selling shares at an average price of US$321. That sale reduced their total holding by 30% which is hardly insignificant, but far from the worst we've seen.
The Last 12 Months Of Insider Transactions At Caterpillar
In fact, the recent sale by Andrew R. Bonfield was the biggest sale of Caterpillar shares made by an insider individual in the last twelve months, according to our records. That means that an insider was selling shares at around the current price of US$322. While we don't usually like to see insider selling, it's more concerning if the sales take place 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.
In total, Caterpillar insiders sold more than they bought over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like Caterpillar 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 Caterpillar
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. Caterpillar insiders own about US$278m worth of shares (which is 0.2% of the company). 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 Does This Data Suggest About Caterpillar Insiders?
An insider sold stock recently, but they haven't been buying. And our longer term analysis of insider transactions didn't bring confidence, either. But since Caterpillar is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Caterpillar. For example - Caterpillar has 2 warning signs we think you should be aware of.
But note: Caterpillar 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.