In the last year, multiple insiders have substantially increased their holdings of The Goodyear Tire & Rubber Company (NASDAQ:GT) stock, indicating that insiders’ optimism about the company’s prospects has increased.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
View our latest analysis for Goodyear Tire & Rubber
The Senior VP & General Counsel, David Phillips, made the biggest insider sale in the last 12 months. That single transaction was for US$608k worth of shares at a price of US$7.89 each. That means that an insider was selling shares at slightly below the current price (US$8.83). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it’s only a weak signal. This single sale was 100% of David Phillips’s stake. David Phillips was the only individual insider to sell over the last year.
Happily, we note that in the last year insiders paid US$1.5m for 172.70k shares. On the other hand they divested 77.01k shares, for US$608k. In total, Goodyear Tire & Rubber insiders bought more than they sold over the last year. They paid about US$8.95 on average. These transactions suggest that insiders have considered the current price attractive. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
Goodyear Tire & Rubber is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Goodyear Tire & Rubber insiders own 7.8% of the company, currently worth about US$196m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
There haven’t been any insider transactions in the last three months — that doesn’t mean much. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like Goodyear Tire & Rubber insiders are reasonably well aligned (owning significant chunk of the company’s shares) and optimistic for the future. While it’s good to be aware of 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. You’d be interested to know, that we found 1 warning sign for Goodyear Tire & Rubber and we suggest you have a look.
But note: Goodyear Tire & Rubber 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.
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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.