Possible Bearish Signals With Costco Wholesale Insiders Disposing Stock (2024)

The fact that multiple Costco Wholesale Corporation (NASDAQ:COST) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. 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.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Costco Wholesale

The Last 12 Months Of Insider Transactions At Costco Wholesale

The Director, W. Jelinek, made the biggest insider sale in the last 12 months. That single transaction was for US$5.5m worth of shares at a price of US$686 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$848. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 2.0% of W. Jelinek's holding.

Costco Wholesale insiders didn't buy any shares 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 the date!

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Costco Wholesale Insiders Are Selling The Stock

The last three months saw significant insider selling at Costco Wholesale. Specifically, Senior EVP and COO of Warehouse Operations - U.S. & Mexico Russell Miller ditched US$567k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Does Costco Wholesale 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Costco Wholesale insiders own 0.2% of the company, worth about US$662m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Costco Wholesale Tell Us?

An insider sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. But it is good to see that Costco Wholesale is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. Therefore, you should definitely take a look at this FREE report showing analyst forecasts for Costco Wholesale.

Of course Costco Wholesale may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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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