Quite a few Stepan Company (NYSE:SCL) insiders sold their shares over the past year, which may be a cause for concern. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
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.
The Last 12 Months Of Insider Transactions At Stepan
In the last twelve months, the biggest single sale by an insider was when the Non-Executive Chairman, F. Stepan, sold US$261k worth of shares at a price of US$87.49 per share. That means that an insider was selling shares at around the current price of US$81.08. While insider selling is a negative, to us, it is more negative if the shares are sold 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.
Over the last year we saw more insider selling of Stepan shares, than buying. 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!
For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.
Stepan Insiders Bought Stock Recently
Over the last quarter, Stepan insiders have spent a meaningful amount on shares. VP, General Counsel & Secretary David Kabbes spent US$75k on stock, and there wasn't any selling. This could be interpreted as suggesting a positive outlook.
Does Stepan Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. 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 appears that Stepan insiders own 5.8% of the company, worth about US$97m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Stepan Tell Us?
It's certainly positive to see the recent insider purchase. But we can't say the same for the transactions over the last 12 months. While recent transactions indicate confidence in Stepan, insiders don't own enough of the company to overcome our cautiousness about the longer term transactions. Overall they seem reasonably aligned. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. You'd be interested to know, that we found 1 warning sign for Stepan and we suggest you have a look.
But note: Stepan 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
