Many Lockheed Martin Corporation (NYSE: LMT) insiders ditched their stock over the past year, which may be of interest to the company’s shareholders. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
Although we don’t think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
In the last twelve months, the biggest single sale by an insider was when the Chief Operating Officer, Frank St. John, sold US$3.5m worth of shares at a price of US$438 per share. So what is clear is that an insider saw fit to sell at around the current price of US$408. While insider selling is negative, to us, it is more negative if the shares are sold 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.
In total, Lockheed Martin insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Over the last three months, we’ve seen notably more insider selling, than insider buying, at Lockheed Martin. During that time, insider Gregory Ulmer dumped US$2.9m worth of shares. On the other hand, we note insider John Donovan bought US$250k 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.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Insiders own 0.06% of Lockheed Martin shares, worth about US$67m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
The stark truth for Lockheed Martin is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer-term picture doesn’t give us much comfort. Insiders own shares, but we’re still pretty cautious, given the history of sales. We’d practice some caution before buying! So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. You’d be interested to know, that we found 3 warning signs for Lockheed Martin and we suggest you have a look.
