We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 before you buy or sell Erie Indemnity Company (NASDAQ:ERIE), you may well want to know whether insiders have been buying or selling.
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 Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Erie Indemnity
In the last twelve months, the biggest single purchase by an insider was when President & CEO Timothy NeCastro bought US$198k worth of shares at a price of US$128 per share. That means that an insider was happy to buy shares at around the current price. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. Nonetheless, we consider it positive if insiders want to buy at around the current share price.
In the last twelve months insiders paid US$614k for 5.14k shares purchased. In the last twelve months there was more buying than selling by Erie Indemnity insiders. Their average price was about US$120. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price (US$131). You can see the insider transactions over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Erie Indemnity Have Bought Stock Recently
There was some insider buying at Erie Indemnity over the last quarter. Timothy NeCastro shelled out US$21k for shares in that time. We like it when there are only buyers, and no sellers. But the amount invested in the last three months isn’t enough for us too put much weight on it, as a single factor.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It’s great to see that Erie Indemnity insiders own 53% of the company, worth about US$3.6b. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Erie Indemnity Insider Transactions Indicate?
Our data shows a little more insider buying than selling in the last three months. But overall the difference isn’t worth writing home about. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Erie Indemnity insiders think the business has merit. Of course, the future is what matters most. So if you are interested in Erie Indemnity, you should check out this free report on analyst forecasts for the company.
But note: Erie Indemnity may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.