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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 we'll take a look at whether insiders have been buying or selling shares in Walker & Dunlop, Inc. (NYSE:WD).
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. 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'.
Walker & Dunlop Insider Transactions Over The Last Year
The President & Director, Howard Smith, made the biggest insider sale in the last 12 months. That single transaction was for US$4.0m worth of shares at a price of US$52.51 each. That means that an insider was selling shares at below the current price (US$52.94). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 14.7% of Howard Smith's holding.
In the last twelve months insiders purchased 1521.17 shares for US$70k. But insiders sold 91828 shares worth US$4.8m. All up, insiders sold more shares in Walker & Dunlop than they bought, over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders at Walker & Dunlop Have Sold Stock Recently
There was substantially more insider selling, than buying, of Walker & Dunlop shares over the last three months. In total, Howard Smith sold US$4.0m worth of shares in that time. On the other hand we note Lead Independent Director Alan Bowers bought US$10k worth of shares. Generally this level of net selling might be considered a bit bearish.
Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Walker & Dunlop insiders own about US$119m worth of shares (which is 7.3% 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.
What Might The Insider Transactions At Walker & Dunlop Tell Us?
The insider sales have outweighed the insider buying, at Walker & Dunlop, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. 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 Walker & Dunlop.
Of course Walker & Dunlop may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.