We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Ally Financial Inc. (NYSE:ALLY), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
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.
Insider transactions are not the most important thing when it comes to long-term investing. 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'.
Ally Financial Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the President of Consumer & Commercial Banking Products, Diane Morais, for US$500k worth of shares, at about US$33.35 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of US$15.78. So it is hard to draw any strong conclusion from it. Diane Morais was the only individual insider to sell shares in the last twelve months.
Over the last year, we can see that insiders have bought 37.84k shares worth US$666k. On the other hand they divested 15000 shares, for US$500k. In total, Ally Financial insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
Ally Financial is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Ally Financial Have Bought Stock Recently
It's good to see that Ally Financial insiders have made notable investments in the company's shares. Not only was there no selling that we can see, but they collectively bought US$666k worth of shares. This could be interpreted as suggesting a positive outlook.
Does Ally Financial 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Ally Financial insiders own about US$20m worth of shares. That equates to 0.3% 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 Ally Financial Insider Transactions Indicate?
It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. Given that insiders also own a fair bit of Ally Financial we think they are probably pretty confident of a bright future. 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. Case in point: We've spotted 2 warning signs for Ally Financial you should be aware of.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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