Fairfax Financial Holdings Insiders Sold US$466m Of Shares Suggesting Hesitancy

Over the past year, many Fairfax Financial Holdings Limited (TSE:FFH) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, if numerous insiders are selling, shareholders should investigate more.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Fairfax Financial Holdings

Fairfax Financial Holdings Insider Transactions Over The Last Year

The Founder, V. Watsa, made the biggest insider sale in the last 12 months. That single transaction was for CA$416m worth of shares at a price of CA$1,513 each. That means that even when the share price was below the current price of CA$1,970, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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 35% of V. Watsa's holding.

In the last twelve months insiders purchased 524.00 shares for CA$736k. But insiders sold 306.96k shares worth CA$466m. All up, insiders sold more shares in Fairfax Financial Holdings than they bought, over the last year. You can see the insider transactions (by companies and 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!

I will like Fairfax Financial Holdings better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Fairfax Financial Holdings Insiders Are Selling The Stock

Over the last three months, we've seen notably more insider selling, than insider buying, at Fairfax Financial Holdings. We note insiders cashed in CA$14m worth of shares. On the flip side, insiders spent CA$42k on purchasing shares. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Fairfax Financial Holdings insiders own 11% of the company, worth about CA$4.6b. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Fairfax Financial Holdings Tell Us?

The insider sales have outweighed the insider buying, at Fairfax Financial Holdings, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, Fairfax Financial Holdings has 3 warning signs (and 1 which can't be ignored) we think you should know about.

But note: Fairfax Financial Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.