It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Intact Financial Corporation (TSE:IFC).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, including certain disclosures.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.’
Check out our latest analysis for Intact Financial
Intact Financial Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Mark Tullis for CA$2.1m worth of shares, at about CA$107 per share. That means that an insider was selling shares at around the current price of CA$103. While their view may have changed since the sale, this is not a particularly positive fact. Arguably, insider selling at current prices should give us reason to reflect on whether the stock is fully valued at the moment.
You can see a visual depiction of insider transactions over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Intact Financial Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at Intact Financial. In total, Mark Tullis sold CA$1.0m 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 Intact Financial Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It’s good to see that Intact Financial insiders own 0.5% of the company, worth about CA$57m. This level of insider ownership is good but just short of being particularly stand-out, but it certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Intact Financial Insiders?
An insider sold stock recently, but they haven’t been buying. Furthermore, transactions over the last twelve months dispel the notion that insiders won’t sell readily. Insiders own relatively few shares in the company, and when you consider the sales, we’re not particularly excited about the stock. We’d certainly think twice before buying! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Intact Financial.
Of course Intact Financial may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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 editorial-team@simplywallst.com.