We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in FirstCash, Inc. (NASDAQ:FCFS).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
The Last 12 Months Of Insider Transactions At FirstCash
Over the last year, we can see that the biggest insider sale was by Chairman of the Board Daniel Feehan for US$1.4m worth of shares, at about US$80.60 per share. So what is clear is that an insider saw fit to sell at around the current price of US$74.39. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.
Over the last year, we can see that insiders have bought 2.78k shares worth US$226k. But they sold 24.51k for US$2.0m. In total, FirstCash insiders sold more than they bought over the last year. They sold for an average price of about US$83.03. We don’t gain much confidence from insider selling near the recent share price. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, 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).
FirstCash Insiders Are Selling The Stock
The last three months saw significant insider selling at FirstCash. In total, Independent Director James Graves dumped US$624k 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 directors think that the shares are a bargain.
Insider Ownership of FirstCash
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. FirstCash insiders own about US$84m worth of shares. That equates to 2.6% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Do The FirstCash Insider Transactions Indicate?
An insider sold stock recently, but they haven’t been buying. And our longer term analysis of insider transactions didn’t bring confidence, either. On the plus side, FirstCash makes money, and is growing profits. Insiders own shares, but we’re still pretty cautious, given the history of sales. We’re in no rush to buy! Of course, the future is what matters most. So if you are interested in FirstCash, you should check out this free report on analyst forecasts for the company.
But note: FirstCash 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 firstname.lastname@example.org.