Yahoo Finance Ecolab Insiders Sell US$3.8m Of Stock, Possibly Signalling Caution
Many Ecolab Inc. (NYSE:ECL) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. 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, 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 Ecolab
The Last 12 Months Of Insider Transactions At Ecolab
In the last twelve months, the biggest single sale by an insider was when the CEO & Chairman of the Board, Christophe Beck, sold US$1.5m worth of shares at a price of US$174 per share. That means that even when the share price was below the current price of US$190, an insider wanted to cash in some shares. 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. This single sale was just 14% of Christophe Beck's stake.
In total, Ecolab insiders sold more than they bought 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!
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Ecolab Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of Ecolab shares over the last three months. We note insider Angela Busch cashed in US$1.4m worth of shares. On the flip side, Independent Lead Director David MacLennan spent US$153k on purchasing shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.
Insider Ownership Of Ecolab
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. It's great to see that Ecolab insiders own 0.5% of the company, worth about US$259m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Ecolab Insider Transactions Indicate?
The insider sales have outweighed the insider buying, at Ecolab, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But since Ecolab is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that Ecolab has 2 warning signs and it would be unwise to ignore these.
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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.
