Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) Insiders Have Been Selling
We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Schnitzer Steel Industries, Inc. (NASDAQ:SCHN).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
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Schnitzer Steel Industries Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Chairman John Carter sold US$506k worth of shares at a price of US$37.02 per share. While the sale doesn’t make us feel confident, we do note it was conducted at a price well above the current share price, which is US$24.03. So it may not tell us anything about how insiders feel about the current share price.
In the last twelve months insiders netted US$2.2m for 77.16k shares sold. In total, Schnitzer Steel Industries insiders sold more than they bought over the last year. The sellers received a price of around US$28.89, on average. It is certainly not great to see that insiders have sold shares in the company. But the selling was at much higher prices than the current share price (US$24.03), so it probably doesn’t tell us a lot about the value on offer today. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Schnitzer Steel Industries Insiders Are Selling The Stock
The last three months saw significant insider selling at Schnitzer Steel Industries. Specifically, insiders ditched US$1.7m worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
Insider Ownership of Schnitzer Steel Industries
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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 Schnitzer Steel Industries insiders own 3.4% of the company, worth about US$21m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Schnitzer Steel Industries Tell Us?
Insiders sold stock recently, but they haven’t been buying. And there weren’t any purchases to give us comfort, over the last year. But since Schnitzer Steel Industries is profitable and growing, we’re not too worried by this. Insiders own shares, but we’re still pretty cautious, given the history of sales. We’re in no rush to buy! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course Schnitzer Steel Industries may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
