We wouldn't blame The Goodyear Tire & Rubber Company (NASDAQ:GT) shareholders if they were a little worried about the fact that David Phillips, the Senior VP & General Counsel recently netted about US$608k selling shares at an average price of US$7.89. Probably the most concerning element of the whole transaction is that the disposal amounted to 100% of their entire holding.

Goodyear Tire & Rubber Insider Transactions Over The Last Year

Notably, that recent sale by David Phillips is the biggest insider sale of Goodyear Tire & Rubber shares that we've seen in the last year. That means that an insider was selling shares at slightly below the current price (US$8.28). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower 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. It is worth noting that this sale was 100% of David Phillips's holding.

Happily, we note that in the last year insiders paid US$1.4m for 147.70k shares. On the other hand they divested 77.01k shares, for US$608k. In the last twelve months there was more buying than selling by Goodyear Tire & Rubber insiders. The average buy price was around US$9.15. This is nice to see since it implies that insiders might see value around current prices. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Insider Ownership Of Goodyear Tire & Rubber

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Goodyear Tire & Rubber insiders own about US$17m worth of shares. That equates to 0.8% of the company. 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 Goodyear Tire & Rubber Insider Transactions Indicate?

It is good to see recent purchasing. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Goodyear Tire & Rubber insiders are well aligned, and that they may think the share price is too low. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. In terms of investment risks, we've identified 1 warning sign with Goodyear Tire & Rubber and understanding it should be part of your investment process.

But note: Goodyear Tire & Rubber 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 of direct interests only, but not derivative transactions or indirect interests.

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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.