Sensient Technologies Corporation (NYSE:SXT) shareholders may have reason to be concerned, as several insiders sold their shares over the past year. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

Sensient Technologies Insider Transactions Over The Last Year

The Director & Member of Scientific Advisory Committee, Essie Whitelaw, made the biggest insider sale in the last 12 months. That single transaction was for US$428k worth of shares at a price of US$95.02 each. That means that an insider was selling shares at slightly below the current price (US$97.30). 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. 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. We note that the biggest single sale was only 21% of Essie Whitelaw's holding.

Happily, we note that in the last year insiders paid US$294k for 3.17k shares. But insiders sold 6.19k shares worth US$588k. Over the last year we saw more insider selling of Sensient Technologies shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Sensient Technologies Insiders Are Selling The Stock

Over the last three months, we've seen notably more insider selling, than insider buying, at Sensient Technologies. In total, Director & Member of Scientific Advisory Committee Essie Whitelaw sold US$428k worth of shares in that time. On the flip side, insiders spent US$291k on purchasing 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.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Sensient Technologies insiders own about US$64m worth of shares. That equates to 1.5% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Sensient Technologies Insiders?

The insider sales have outweighed the insider buying, at Sensient Technologies, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But since Sensient Technologies is profitable and growing, we're not too worried by this. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. 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. For example, Sensient Technologies has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about.

Of course Sensient Technologies 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.

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.