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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in United Insurance Holdings Corp. (NASDAQ:UIHC).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.
United Insurance Holdings Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Independent Director Kern Davis bought US$1.0m worth of shares at a price of US$16.57 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$12.92). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. We note that Kern Davis was both the biggest buyer and the biggest seller.
In the last twelve months insiders purchased 97058.66 shares for US$1.5m. On the other hand they divested 189523 shares, for US$3.1m. All up, insiders sold more shares in United Insurance Holdings than they bought, over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like United Insurance Holdings better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
United Insurance Holdings Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at United Insurance Holdings. In total, insiders bought US$311k worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.
Does United Insurance Holdings 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. We usually like to see fairly high levels of insider ownership. United Insurance Holdings insiders own about US$276m worth of shares (which is 50% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At United Insurance Holdings Tell Us?
It's certainly positive to see the recent insider purchases. On the other hand the transaction history, over the last year, isn't so positive. Overall, we'd prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, United Insurance Holdings insiders are reasonably well aligned, and optimistic for the future. Of course, the future is what matters most. So if you are interested in United Insurance Holdings, you should check out this free report on analyst forecasts for the company.
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.
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.
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 firstname.lastname@example.org. 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.