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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 before you buy or sell NMI Holdings, Inc. (NASDAQ:NMIH), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
NMI Holdings Insider Transactions Over The Last Year
The Lead Director, Steven Scheid, made the biggest insider sale in the last 12 months. That single transaction was for US$647k worth of shares at a price of US$21.94 each. That means that an insider was selling shares at slightly below the current price (US$28.12). We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 33.6% of Steven Scheid's holding.
We note that in the last year insiders divested 163k shares for a total of US$3.8m. NMI Holdings insiders didn't buy any shares over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at NMI Holdings Have Sold Stock Recently
The last three months saw significant insider selling at NMI Holdings. In total, insiders sold US$721k 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 NMI Holdings
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. Insiders own 2.1% of NMI Holdings shares, worth about US$41m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The NMI Holdings Insider Transactions Indicate?
Insiders sold stock recently, but they haven't been buying. And even if we look to the last year, we didn't see any purchases. On the plus side, NMI Holdings makes money, and is growing profits. While insiders do own shares, they don't own a heap, and they have been selling. We're in no rush to buy! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for NMI Holdings.
But note: NMI Holdings 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 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 email@example.com. 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.