Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!
We often see insiders buying up shares in companies that perform well over the long term. 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 shareholders might well want to know whether insiders have been buying or selling shares in Employers Holdings, Inc. (NYSE:EIG).
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, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
The Last 12 Months Of Insider Transactions At Employers Holdings
Independent Director Valerie Glenn made the biggest insider sale in the last 12 months. That single transaction was for US$418k worth of shares at a price of US$41.80 each. That means that an insider was selling shares at around the current price of US$40.32. They might be selling for a variety of reasons, but it's hard to argue this is a bullish sign. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.
In the last twelve months insiders netted US$563k for 13.48k shares sold. All up, insiders sold more shares in Employers Holdings than they bought, over the last year. They sold for an average price of about US$41.81. It's not particularly great to see insiders were selling shares around current prices. While some insiders have decided to take some money off the table, we wouldn't put too much weight on this fact. The chart below shows insider transactions (by 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders at Employers Holdings Have Sold Stock Recently
Over the last three months, we've seen significant insider selling at Employers Holdings. Specifically, insiders ditched US$478k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Does Employers Holdings Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Employers Holdings insiders own about US$38m worth of shares. That equates to 2.9% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Employers Holdings Insiders?
Insiders sold Employers Holdings shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. But since Employers Holdings is profitable and growing, we're not too worried by this. Insiders own shares, but we're still pretty cautious, given the history of sales. We're in no rush to buy! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Employers Holdings.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.