Over the past year, many Campbell Soup Company (NYSE:CPB) insiders sold a substantial stake in the company, which may have caught the attention of shareholders. 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 believe shareholders should simply follow insider trading, we would consider it foolish to ignore insider trading altogether.
The last 12 months of insider trading at Campbell Soup
In the past twelve months, the largest single insider sale occurred when insider Craig Slavtcheff sold US$616,000 worth of stock at US$47.00 per share. Clearly, then, an insider wanted to take money off the table, even below the current price of US$50.69. Generally, we consider it discouraging when insiders sell below the current price, as it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, this is only a weak signal. This single sale represented only 29% of Craig Slavtcheff’s stake.
Campbell Soup insiders haven’t bought any shares in the past year. The chart below shows insider trading (by companies and individuals) over the past year. If you click on the chart, you can see all individual trades including stock price, individual and date!
If you like buying stocks that insiders are buying, rather than selling, then you might love this free list of companies. (Hint: insiders bought them).
Campbell Soup insiders sell the stock
The last quarter saw significant insider selling in Campbell Soup stock. Specifically, insiders dumped $1.1 million worth of stock during this time, and we recorded no purchases. All in all, that makes us a little cautious, but that’s not all.
Campbell’s Soup Insider Ownership
Another way to test alignment between a company’s executives and other shareholders is to look at how many shares they own. High insider participation often makes company management more concerned with the interests of shareholders. Campbell Soup insiders own 34% of the company, which is currently worth around US$5.1 billion based on recent share price. This type of significant insider ownership generally increases the chances that the company will be run in the best interests of all shareholders.
So what do the Campbell Soup insider trades indicate?
Insiders recently sold shares of Campbell Soup, but did not buy any. And even if we look at last year, we haven’t seen any purchases. On the plus side, Campbell Soup is making money and increasing profits. The company enjoys strong insider ownership, but we are a little hesitant given the history of stock sales. In addition to knowing the insider trading going on, it pays to identify the risks that Campbell Soup faces. During our analysis, we found that Campbell Soup has 2 warning signs and it would be unwise to ignore them.
If you’d rather check out another company – one with potentially superior finances – then don’t miss this free list of attractive companies, which have a high return on equity and low debt.
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.
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