It is not uncommon to see companies perform well in the years after insiders buy shares. 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 before you buy or sell First Data Corporation (NYSE:FDC), you may well want to know whether insiders have been buying or selling.
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, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Colombia 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’.
The Last 12 Months Of Insider Transactions At First Data
Over the last year, we can see that the biggest insider sale was by Jeffrey Shanahan for US$2.8m worth of shares, at about US$24.05 per share. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of US$16.42. So it is hard to draw any strong conclusion from it.
In the last twelve months insiders netted US$9.6m for 430.20k shares sold. Over the last year we saw more insider selling of First Data shares, than buying. They sold for an average price of about US$22.22. Insider selling doesn’t make us excited to buy. But the selling was at much higher prices than the current share price (US$16.42), so it probably doesn’t tell us a lot about the value on offer today. You can see the insider transactions 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
First Data Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at First Data. In total, Cynthia Armine-Klein sold US$536k worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
Does First Data Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. First Data insiders own 2.5% of the company, currently worth about US$389m 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.
So What Do The First Data Insider Transactions Indicate?
An insider hasn’t bought First Data stock in the last three months, but there was some selling. And there weren’t any purchases to give us comfort, over the last year. On the plus side, First Data makes money, and is growing profits. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for First Data.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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 firstname.lastname@example.org.