Over the past year, many CME Group Inc. (NASDAQ:CME) insiders sold a significant stake in the company which may have piqued investors' interest. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At CME Group
Over the last year, we can see that the biggest insider purchase was by Independent Director William Shepard for US$8.3m worth of shares, at about US$170 per share. So it's clear an insider wanted to buy, at around the current price, which is US$175. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the CME Group insider decided to buy shares at close to current prices. William Shepard was the only individual insider to buy during the last year.
All up, insiders sold more shares in CME Group than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like CME Group better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
CME Group Insiders Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at CME Group. We can see that Independent Director William Shepard paid US$8.3m for shares in the company. But insiders only sold shares worth US$1.1m. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Does CME Group Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that CME Group insiders own 0.4% of the company, worth about US$222m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About CME Group Insiders?
The recent insider purchase is heartening. On the other hand the transaction history, over the last year, isn't so positive. Overall, we'd prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, CME Group insiders are reasonably well aligned, and optimistic for the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that CME Group has 1 warning sign and it would be unwise to ignore it.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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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.
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