We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Arthur J. Gallagher & Co. (NYSE:AJG).
Do Insider Transactions Matter?
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. 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.'
The Last 12 Months Of Insider Transactions At Arthur J. Gallagher
In the last twelve months, the biggest single purchase by an insider was when Chairman J. Gallagher bought US$601k worth of shares at a price of US$66.12 per share. That means that an insider was happy to buy shares at around the current price of US$80.90. That means they have been optimistic about the company in the past, though they may have changed their mind. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. Happily, the Arthur J. Gallagher insiders decided to buy shares at close to current prices.
Over the last year, we can see that insiders have bought 13090 shares worth US$894k. But they sold 22090 for US$1.6m. Over the last year we saw more insider selling of Arthur J. Gallagher shares, than buying. The chart below shows insider transactions (by 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 Arthur J. Gallagher better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders at Arthur J. Gallagher Have Sold Stock Recently
The last quarter saw substantial insider selling of Arthur J. Gallagher shares. In total, insiders dumped US$482k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership of Arthur J. Gallagher
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Arthur J. Gallagher insiders own 1.2% of the company, currently worth about US$175m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Do The Arthur J. Gallagher Insider Transactions Indicate?
Insiders 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, Arthur J. Gallagher makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Arthur J. Gallagher.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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