The fact that multiple Caterpillar Inc. (NYSE:CAT) insiders who dumped a sizable amount of stock over the past year might have raised some eyebrows among investors. When evaluating internal transactions, knowing whether insiders are buying versus 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 don’t think shareholders should simply follow internal transactions, we would consider it foolish to ignore internal transactions altogether.
View our latest analysis for Caterpillar
Caterpillar internal transactions over the past year
Over the past twelve months, the largest single sale by an insider was when Chief Legal Officer & General Counsel Suzette Long sold $897,000 worth of stock at a price of $235 per share. This means that even when the stock price was slightly lower than the current price of USD 237, an insider wanted to cash out some shares. As a general rule, we find it off-putting when insiders sell below the going price, because it suggests they were happy with a lower valuation. Keep in mind, however, that sellers can have a variety of reasons for selling, so we don’t know for sure what they think about the stock price. This single sale was only 26% of Suzette Long’s share.
In total, Caterpillar insiders sold more than they bought in the last year. The chart below shows privileged transactions (by companies and individuals) over the past year. By clicking on the graph below, you can see the precise details of each insider transaction!
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Caterpillar insiders sold shares recently
Over the past three months, we’ve seen significant insider selling at Caterpillar. In total, Chief Legal Officer & General Counsel Suzette Long offloaded $447,000 worth of stock during that time, and we have not recorded any purchases. In light of this, it’s hard to argue that all insiders think stocks are a bargain.
Caterpillar boasts high insider ownership?
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of internal ownership. It’s good to see that Caterpillar insiders own 0.2% of the company, worth about $239 million. I like to see this level of internal ownership, because it increases the chances that management has the best interests of the shareholders in mind.
So what do Caterpillar’s internal transactions indicate?
An insider recently sold Caterpillar stock, but didn’t buy any. And our long-term analysis of internal transactions didn’t bring confidence either. But it’s good to see that Caterpillar is growing earnings. It’s nice to see high insider ownership, but the insider sale leaves us wary. While we like to know what’s going on with insider ownership and transactions, we also make sure to consider the risks a stock faces before making any investment decisions. For example, we have identified 2 warning signs for Caterpillar (1 is a bit unfortunate) that you should be aware of.
Of course Caterpillar may not be the best stock to buy. Then you may want to see this free collection of high quality companies.
For the purposes of this article, insiders are those who report their transactions to the appropriate regulatory body. We currently consider open market transactions and private dispositions, but not derivatives transactions.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using unbiased methodology only and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis driven by fundamental data. Please 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 of the stocks mentioned.
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