Clean Harbors' Insider Sales Signal Caution Amid Volatile Stock Performance

Julian CruzSaturday, Jun 7, 2025 4:15 am ET
28min read

Clean Harbors, Inc. (CLH), a leading provider of environmental, energy, and industrial services, has drawn investor attention in recent weeks due to a series of insider sales by executives and directors. These transactions, combined with the company's fluctuating stock price, raise questions about whether insiders see near-term challenges ahead—or if the selling reflects routine compensation practices. Below, we analyze the rationale behind the sales and their implications for shareholders.

Recent Insider Activity: A Mix of Strategic Selling and Compensation-Driven Moves

In the first half of 2025, Clean Harbors insiders collectively sold shares worth $1.0 million, with a notable emphasis on informative sells—transactions not tied to prearranged plans or compensation. The most significant moves include:
- Robert Speights, President of Industrial Services, sold 1,022 shares on May 27 at $228.49 per share. This sale, flagged as “informative,” reduced his holdings to 16,310 shares.
- A director sold 1,250 shares on May 29, also categorized as informative, suggesting skepticism about the stock's short-term prospects.

Other transactions, such as those by CFO Eric Dugas and the EVP of Sales & Service, were uninformative, tied to equity awards or grants. While these do not signal bearish sentiment, the concentration of informative sells in late May underscores cautiousness among certain insiders.

Stock Performance: Volatility Mirrors Insider Concerns

The stock price trajectory between May 27 and June 3, 2025, reveals a downward trend despite some intraday recoveries. Key data points include:
- May 27: Closed at $229.14, the period's high, but volume spiked to 388,400 shares, likely influenced by Speights' sale.
- June 3: Closed at $226.56, a 1.5% decline from the May 27 peak, with narrowing trading ranges suggesting reduced investor confidence.

The chart would show a peak in late May followed by a gradual decline, aligning with the timing of insider sales. Notably, the stock's high volume on May 27 suggests institutional or retail investors may have followed insiders' lead, amplifying the downward pressure.

Implications for Investors: Balancing Sentiment and Fundamentals

The disconnect between informative sells and uninformative transactions complicates the narrative. While Speights' and the director's sales may reflect concerns about near-term risks—such as regulatory headwinds or project delays—other insiders' grant-related activity appears routine.

However, the $1.0 million aggregate insider selling over three months, particularly from decision-makers like Speights, is a red flag. Historically, informative sells by C-suite executives correlate with underperformance in the following 6–12 months, per academic studies.

Investors should also consider:
1. CEO Eric Gerstenberg's stance: The CEO has not sold shares recently, which might suggest alignment with long-term strategy.
2. Sector context: The environmental services sector faces cyclical demand and regulatory uncertainty, which could pressure margins.
3. Valuation: At current prices, CLH trades at 15x forward earnings, slightly below its five-year average. This could offer a margin of safety if fundamentals stabilize.

Investment Considerations

  • Caution for Short-Term Investors: The insider selling and stock decline suggest near-term risks. Avoid aggressive bets unless the stock tests support levels (e.g., $220).
  • Long-Term Holders: Focus on CLH's dominant market position and recurring revenue streams from hazardous waste management. A dip below $220 could present a buying opportunity if fundamentals remain intact.
  • Monitor Insider Activity: Any further informative sells by executives or directors should prompt heightened scrutiny.

Final Analysis

Clean Harbors' recent insider sales highlight a divide between certain executives and the broader compensation-driven transactions. While the stock's decline aligns with the timing of these sales, investors must weigh short-term signals against the company's robust long-term fundamentals. For now, a wait-and-see approach is prudent, with a focus on upcoming earnings reports and regulatory developments. Historically, buying CLH five days before earnings and holding until the next release has yielded an average return of 1.8% since 2020, though with a 9.5% maximum drawdown and a 58% hit rate. This suggests that while earnings periods may offer opportunities, the associated volatility underscores the need for caution, especially amid recent insider skepticism.

Final recommendation: Hold shares if owned, but avoid new purchases until insider sentiment improves or valuation becomes more compelling.