Recent insider trends for Caterpillar Inc. (NYSE:CAT) have caught the attention of investors. Analysts study insider data to get a sense of sense of what key shareholders think about the outlook for a particular stock. In the case of CAT, the data has some interesting implications for where the stock might be headed.
Institutions own 70.39% of Caterpillar Inc. (CAT)’s shares. The total value of these holdings, in millions, is $49,451. Among active positions in the latest quarter, 521 holders increased their positions by a total of 30.36 million shares, 518 holders decreased the positions by a total of 35.47 million shares, and 209 holders held their positions. This works out to a net decrease in ownership of 5.11 million shares, and suggests that institutions are feeling bearish about the stock.
Among new and sold out positions, 117 holders initiated new positions by a total of 4.86 million shares and 57 holders exited their positions by a total of 2.07 million shares. This nets out to an increase of 2.79 million shares and is a bullish sign for CAT.
In the last three months, insiders executed a total of 7 trades. 3 of these were buys and 4 were sells. Insider ownership decreased by a total of 271629 shares, which suggests that CAT’s key executives are feeling less optimistic about the outlook for the stock. The data from the past twelve months tells a similar story: insiders executed 17 buys and 21 sells, and ownership decreased by a net of 434975 shares.
The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the number of a stock’s shares currently being shorted, captures what the market as a whole feels about a stock. Caterpillar Inc. (NYSE:CAT)’s short interest is 16.86 million shares, or % of the float. This represents a decrease of % in the number of shares being shorted compared to the previous reading, and implies that investors felt less pessimistic about the stock during the past two weeks.
In light of the insider ownership and trading data it makes sense to consider technicals to see if they come to a similar conclusion about the outlook for CAT. A composite of 13 technical indicators that includes measures such as moving averages and momentum oscillators suggests that CAT is a Strong buy, which implies that CAT is expected to outperform the market based on prior trading patterns.
Institutional ownership trends suggest that the stock is cheap and the insider trading data indicates that insiders are bearish. Technical indicators (also) suggest that Caterpillar Inc. (NYSE:CAT) is undervalued.