Even though Danaher Corporation (NYSE:DHR) stock gained 6.1% last week, insiders who sold US$389m worth of stock over the past year are probably better off. Selling at an average price of US$308, which is higher than the current price might have been the right call as holding on to stock would have meant their investment would be worth less now than it was at the time of sale.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
Danaher Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Co-Founder & Director, Mitchell Rales, sold US$378m worth of shares at a price of US$315 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$278. So it may not tell us anything about how insiders feel about the current share price. Notably Mitchell Rales was also the biggest buyer, having purchased US$50k worth of shares.
All up, insiders sold more shares in Danaher than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Danaher better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Danaher Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at Danaher. Specifically, Executive Vice President Joakim Weidemanis ditched US$3.3m 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.
Does Danaher Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company 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. Danaher insiders own about US$21b worth of shares (which is 10% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Danaher Tell Us?
An insider sold Danaher shares recently, but they didn't buy any. And our longer term analysis of insider transactions didn't bring confidence, either. But since Danaher is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 1 warning sign for Danaher you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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, but not derivative transactions.
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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.
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