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We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in White Mountains Insurance Group, Ltd. (NYSE:WTM).
Do Insider Transactions Matter?
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 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.'
The Last 12 Months Of Insider Transactions At White Mountains Insurance Group
Over the last year, we can see that the biggest insider sale was by the Director, Yves Brouillette, for US$2.7m worth of shares, at about US$919 per share. That means that an insider was selling shares at slightly below the current price (US$944). 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 44.1% of Yves Brouillette's holding.
In total, White Mountains Insurance Group 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
White Mountains Insurance Group Insiders Are Selling The Stock
We've seen more insider selling than insider buying at White Mountains Insurance Group recently. In that time, insiders dumped US$5.3m worth of shares. On the flip side, Director David Tanner spent US$459k on purchasing shares (as mentioned above). Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
Insider Ownership of White Mountains Insurance Group
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Insiders own 2.4% of White Mountains Insurance Group shares, worth about US$72m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About White Mountains Insurance Group Insiders?
The stark truth for White Mountains Insurance Group is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We're in no rush to buy! Along with insider transactions, I recommend checking if White Mountains Insurance Group is growing revenue. This free chart of historic revenue and earnings should make that easy.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 firstname.lastname@example.org. 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.