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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 CNA Financial Corporation (NYSE:CNA).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
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. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
CNA Financial Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Executive VP & Chief Underwriting Officer Douglas Worman sold US$543k worth of shares at a price of US$47.66 per share. So what is clear is that an insider saw fit to sell at around the current price of US$43.21. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at around the current price.
Over the last year, we note insiders sold 14.92k shares worth US$716k. In total, CNA Financial insiders sold more than they bought over the last year. The sellers received a price of around US$48.01, on average. We don’t gain much confidence from insider selling near the recent share price. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Insiders own 0.3% of CNA Financial shares, worth about US$41m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At CNA Financial Tell Us?
It doesn’t really mean much that no insider has traded CNA Financial shares in the last quarter. Our analysis of CNA Financial insider transactions leaves us cautious. The modest level of insider ownership is, at least, some comfort. Of course, the future is what matters most. So if you are interested in CNA Financial, you should check out this free report on analyst forecasts for the company.
Of course CNA Financial 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.