We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Kansas City Southern (NYSE:KSU).
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Kansas City Southern Insider Transactions Over The Last Year
CFO & Executive VP Michael Upchurch made the biggest insider sale in the last 12 months. That single transaction was for US$228k worth of shares at a price of US$110 each. So what is clear is that an insider saw fit to sell at around the current price of US$109. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price.
Over the last year we saw more insider selling of Kansas City Southern shares, than buying. The sellers received a price of around US$114, on average. We don’t gain confidence from insider selling below the recent share price. But we wouldn’t put too much weight on the insider selling. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Kansas City Southern is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Kansas City Southern Insiders Bought Stock Recently
It’s good to see that Kansas City Southern insiders have made notable investments in the company’s shares. Henry Maier spent US$103k on stock, and there wasn’t any selling. This could be interpreted as suggesting a positive outlook.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Kansas City Southern insiders own 0.6% of the company, worth about US$69m. 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 Kansas City Southern Insider Transactions Indicate?
The recent insider purchase is heartening. On the other hand the transaction history, over the last year, isn’t so positive. While recent transactions indicate confidence in Kansas City Southern, insiders don’t own enough of the company to overcome our cautiousness about the longer term transactions. Overall they seem reasonably aligned. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Kansas City Southern.
Of course Kansas City Southern may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.