Linamar Corporation (TSE:LNR) insiders sold $5.6 million worth of shares, possibly signaling a downtrend

Over the past year, many Linamar Company (TSE:LNR) insiders sold a large stake in the company, which may have piqued investor interest. Knowing whether insiders are buying is generally more useful when evaluating insider trades, as insider selling can have a variety of explanations. However, when multiple insiders are selling shares over a specific length of time, shareholders should take heed, as this could possibly be a red flag.

While we don’t think shareholders should simply follow insider trades, we think it makes perfect sense to keep an eye on what insiders are doing.

See our latest analysis for Linamar

The last 12 months of insider trading at Linamar

In the past twelve months, the largest single insider purchase was when Executive Board Chair and CEO Linda Hasenfratz purchased C$3.6 million worth of stock at a price of 72 .55 Canadian dollars per share. This means that even when the stock price was above C$62.72 (the recent price), an insider wanted to buy stock. Their perspective may have changed since then, but it at least shows that they were feeling optimistic at the time. For us, it is very important to consider the price that insiders pay for the shares. It is generally more encouraging if they paid above the current price, as this suggests that they perceived value even at higher levels.

Over the past twelve months, insiders have purchased 61,440 shares for C$4.3 million. But insiders sold 86,10,000 shares worth C$5.6 million. Over the past year, we have seen more insider sales of Linamar shares than purchases. You can see a visual representation of insider trading (by companies and individuals) over the past 12 months, below. If you click on the chart, you can see all individual trades including stock price, individual and date!

TSX:LNR Insider Trading Volume September 3, 2022

If you’re like me, then you not want to miss this free list of growing companies insiders are buying.

Linamar insiders sell shares

Over the past three months, we have seen significantly more insider selling than insider buying at Linamar. Around that time, CTO, EVP of Sales and Marketing, and non-independent director Mark Stoddart sold C$519,000 worth of stock. On the other hand, we note that insiders bought CA$402,000 worth of stock. Generally, this level of net selling can be seen as a bit bearish.

Does Linamar boast of high insider ownership?

For an ordinary shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely insiders will be incentivized to build the company for the long term. Linamar insiders own approximately C$344 million of stock (or 8.6% of the company). Most shareholders would be happy to see this type of insider ownership, as it suggests that management’s incentives are well aligned with those of other shareholders.

So what do Linamar insider trading indicate?

Unfortunately, there have been more insider selling than buying of Linamar stock over the past three months. Zooming out, the longer term image doesn’t give us much comfort. Although insiders hold a lot of stock in the company (which is good), our analysis of their transactions does not give us confidence in the company. In addition to knowing insider trading taking place, it pays to identify the risks that Linamar faces. To do this, you need to find out about the 3 warning signs we spotted some with Linamar (including 1 who is a little unpleasant).

Sure Linamar may not be the best stock to buy. So you might want to see this free set of high quality companies.

For the purposes of this article, insiders are persons who report their transactions to the relevant regulatory body. We currently record open market transactions and private dispositions, but not derivative transactions.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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