Don't Ignore The Insider Selling In Patrick Industries

Some Patrick Industries, Inc. (NASDAQ:PATK) shareholders may be a little concerned to see that the CEO & Chairman of the Board, Andy Nemeth, recently sold a substantial US$2.9m worth of stock at a price of US$115 per share. However, that sale only accounted for 7.7% of their holding, so arguably it doesn't say much about their conviction.

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Patrick Industries Insider Transactions Over The Last Year

Notably, that recent sale by Andy Nemeth is the biggest insider sale of Patrick Industries shares that we've seen in the last year. So what is clear is that an insider saw fit to sell at around the current price of US$111. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.

Over the last year, we can see that insiders have bought 26.57k shares worth US$2.3m. But insiders sold 113.29k shares worth US$12m. Over the last year we saw more insider selling of Patrick Industries shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Check out our latest analysis for Patrick Industries

I will like Patrick Industries better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

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. Patrick Industries insiders own 4.3% of the company, currently worth about US$157m based on the recent share price. 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 Does This Data Suggest About Patrick Industries Insiders?

An insider sold Patrick Industries shares recently, but they didn't buy any. And our longer term analysis of insider transactions didn't bring confidence, either. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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. For example - Patrick Industries has 2 warning signs we think you should be aware of.

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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.