It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in IHS Markit Ltd. (NYSE:INFO).
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. 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’.
View our latest analysis for IHS Markit
The Last 12 Months Of Insider Transactions At IHS Markit
The Executive VP & President of Financial Services, Adam Kansler, made the biggest insider sale in the last 12 months. That single transaction was for US$4.3m worth of shares at a price of US$80.63 each. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$89.96. 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. We note that the biggest single sale was only 30% of Adam Kansler’s holding.
Happily, we note that in the last year insiders paid US$1.9m for 29.98k shares. But they sold 56.08k shares for US$4.5m. In total, IHS Markit insiders sold more than they bought over the last year. 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Does IHS Markit Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that IHS Markit insiders own 0.5% of the company, worth about US$172m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At IHS Markit Tell Us?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. While we feel good about high insider ownership of IHS Markit, we can’t say the same about the selling of shares. While we like knowing what’s going on with the insider’s ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. In terms of investment risks, we’ve identified 2 warning signs with IHS Markit and understanding them should be part of your investment process.
Of course IHS Markit 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, but not derivative transactions.
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