By selling US$36m worth of Chubb Limited (NYSE:CB) stock at an average sell price of US$203 over the last year, insiders seemed to have made the most of their holdings. The company’s market cap plunged by US$7.0b after price dropped by 8.9% last week but insiders were able to limit their loss to an extent.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At Chubb
Over the last year, we can see that the biggest insider sale was by the Executive Chairman & CEO, Evan Greenberg, for US$13m worth of shares, at about US$210 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$175. So it may not shed much light on insider confidence at current levels.
Insiders in Chubb didn't buy any shares in the last year. The chart below shows insider transactions (by companies and 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!
I will like Chubb better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Chubb Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at Chubb. In total, Executive Chairman & CEO Evan Greenberg dumped US$5.0m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Chubb insiders own 0.5% of the company, currently worth about US$354m 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.
What Might The Insider Transactions At Chubb Tell Us?
An insider sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. It is good to see high insider ownership, but the insider selling leaves us cautious. 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. At Simply Wall St, we found 1 warning sign for Chubb that deserve your attention before buying any shares.
But note: Chubb 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.
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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