We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Herc Holdings Inc. (NYSE:HRI).

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

Check out our latest analysis for Herc Holdings

The Last 12 Months Of Insider Transactions At Herc Holdings

Over the last year, we can see that the biggest insider purchase was by Independent Non-Executive Chairman Herbert Henkel for US$224k worth of shares, at about US$23.12 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$42.17. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Over the last year, we can see that insiders have bought 18.00k shares worth US$433k. On the other hand they divested 8.00k shares, for US$224k. In the last twelve months there was more buying than selling by Herc Holdings insiders. 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!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Herc Holdings Insiders Are Selling The Stock

There was substantially more insider selling, than buying, of Herc Holdings shares over the last three months. In that time, insider Mario Gabelli dumped US$224k worth of shares. On the flip side, insider Mario Gabelli spent US$112k on purchasing shares. Generally this level of net selling might be considered a bit bearish.

Does Herc Holdings Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 1.4% of Herc Holdings shares, worth about US$18m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Herc Holdings Insider Transactions Indicate?

The insider sales have outweighed the insider buying, at Herc Holdings, in the last three months. But we take heart from prior transactions. We like that insiders own a fair amount of the company. So we're happy enough to look past some selling. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 5 warning signs for Herc Holdings (1 shouldn't be ignored!) and we strongly recommend you look at these before investing.

But note: Herc Holdings 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.

This article by Simply Wall St is general in nature. 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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