Insiders at United Rentals, Inc. (NYSE:URI) sold US$8.3m worth of stock, a potential red flag that needs to be monitored
While it’s been a great week for United Rentals, Inc. (NYSE:URI) shareholders after stock gained 4.8%, they should consider it with a grain of salt. In spite of the relatively cheap prices, insiders made the decision to sell US$8.3m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Check out our latest analysis for United Rentals
The Last 12 Months Of Insider Transactions At United Rentals
Notably, that recent sale by Dale Asplund is the biggest insider sale of United Rentals shares that we've seen in the last year. So it's clear an insider wanted to take some cash off the table, even below the current price of US$455. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was 52% of Dale Asplund's stake.
Over the last year, we can see that insiders have bought 349.99 shares worth US$111k. On the other hand they divested 20.79k shares, for US$8.3m. All up, insiders sold more shares in United Rentals than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
United Rentals Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of United Rentals shares over the last three months. In that time, insiders dumped US$6.1m worth of shares. On the other hand we note Independent Director Jose Alvarez bought US$61k worth of shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.
Does United Rentals Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. 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's great to see that United Rentals insiders own 0.4% of the company, worth about US$136m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The United Rentals Insider Transactions Indicate?
The insider sales have outweighed the insider buying, at United Rentals, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But it is good to see that United Rentals is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example - United Rentals has 2 warning signs we think you should be aware of.
But note: United Rentals 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, 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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