Last week, CME Group Inc.'s (NASDAQ:CME) stock jumped 4.2%, but insiders who sold US$11m worth of stock in over the past year are likely to be in a better position. Holding on to stock would have meant their investment would be worth less now than it was at the time of sale. Thus selling at an average price of US$231, which is higher than the current price, may have been the best decision.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At CME Group
The Independent Director William Shepard made the biggest insider purchase in the last 12 months. That single transaction was for US$8.3m worth of shares at a price of US$170 each. That implies that an insider found the current price of US$180 per share to be enticing. That means they have been optimistic about the company in the past, though they may have changed their mind. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. The good news for CME Group share holders is that insiders were buying at near the current price.
In the last twelve months insiders purchased 50.15k shares for US$8.5m. But insiders sold 48.30k shares worth US$11m. In total, CME Group insiders sold more than they bought over the last year. You can see the insider transactions (by companies and 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders At CME Group Have Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at CME Group. In fact, two insiders bought US$8.5m worth of shares. On the other hand, insiders netted US$957k by selling. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
Insider Ownership Of CME Group
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. CME Group insiders own about US$229m worth of shares (which is 0.4% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The CME Group Insider Transactions Indicate?
It is good to see recent purchasing. But we can't say the same for the transactions over the last 12 months. The recent buying by some insiders , along with high insider ownership, suggest that CME Group insiders are fairly aligned, and optimistic. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that CME Group has 1 warning sign and it would be unwise to ignore this.
Of course CME Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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