City Holding Insiders Sell US$4.7m Of Stock, Possibly Signalling Caution

The fact that multiple City Holding Company (NASDAQ:CHCO) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for City Holding

The Last 12 Months Of Insider Transactions At City Holding

In the last twelve months, the biggest single sale by an insider was when the President, Charles Hageboeck, sold US$899k worth of shares at a price of US$101 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$118. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 14% of Charles Hageboeck's stake.

In total, City Holding insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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City Holding Insiders Are Selling The Stock

The last three months saw significant insider selling at City Holding. In total, insiders dumped US$1.5m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

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. Insiders own 2.2% of City Holding shares, worth about US$39m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The City Holding Insider Transactions Indicate?

Insiders sold City Holding shares recently, but they didn't buy any. Zooming out, the longer term picture doesn't give us much comfort. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To that end, you should learn about the 2 warning signs we've spotted with City Holding (including 1 which can't be ignored).

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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.