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Insiders at CME Group Inc. (NASDAQ:CME) sold US$12m worth of stock, possibly indicating weakness in the future

The fact that multiple CME Group Inc. (NASDAQ:CME) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for CME Group

CME Group Insider Transactions Over The Last Year

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. That means that an insider was happy to buy shares at around the current price of US$174. That means they have been optimistic about the company in the past, though they may have changed their mind. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. In this case we're pleased to report that the insider bought shares at close to current prices. The only individual insider to buy over the last year was William Shepard.

Over the last year we saw more insider selling of CME Group shares, than buying. 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!

insider-trading-volume
insider-trading-volume

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insiders At CME Group Have Bought Stock Recently

At CME Group,over the last quarter, we have observed quite a lot more insider buying than insider selling. In total, Independent Director William Shepard bought US$8.3m worth of shares in that time. On the other hand, insiders netted US$1.1m by selling. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Does CME Group 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. CME Group insiders own 0.4% of the company, currently worth about US$221m based on the recent share price. 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. But we can't say the same for the transactions over the last 12 months. The high levels of insider ownership, and the recent buying by an insider suggests they are well aligned and optimistic. 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. While conducting our analysis, we found that CME Group has 1 warning sign and it would be unwise to ignore it.

Of course CME Group 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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