It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in UMB Financial Corporation (NASDAQ:UMBF).
What Is Insider Selling?
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, 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 it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'
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The Last 12 Months Of Insider Transactions At UMB Financial
The , Michael Hagedorn, made the biggest insider sale in the last 12 months. That single transaction was for US$543k worth of shares at a price of US$72.80 each. So what is clear is that an insider saw fit to sell at around the current price of US$66.50. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).
Over the last year, we can see that insiders have bought 8395.38 shares worth US$583k. On the other hand they divested 35635 shares, for US$2.6m. In total, UMB Financial insiders sold more than they bought over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like UMB Financial 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 UMB Financial Have Sold Stock Recently
We've seen more insider selling than insider buying at UMB Financial recently. We note insiders cashed in US$1.2m worth of shares. On the other hand we note Lead Director Gregory Graves bought US$24k worth of shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.
Does UMB Financial Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. UMB Financial insiders own 5.2% of the company, currently worth about US$170m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At UMB Financial Tell Us?
Unfortunately, there has been more insider selling of UMB Financial stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for UMB Financial.
Of course UMB Financial may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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