Don't Ignore The Fact That This Insider Just Sold Some Shares In City Holding Company (NASDAQ:CHCO)

By
Simply Wall St
Published
May 06, 2021
NasdaqGS:CHCO
Source: Shutterstock

We'd be surprised if City Holding Company (NASDAQ:CHCO) shareholders haven't noticed that the Executive VP & CFO, David Bumgarner, recently sold US$167k worth of stock at US$79.25 per share. The eyebrow raising move amounted to a reduction of 14% in their holding.

Check out our latest analysis for City Holding

The Last 12 Months Of Insider Transactions At City Holding

Over the last year, we can see that the biggest insider sale was by the President, Charles Hageboeck, for US$903k worth of shares, at about US$69.89 per share. That means that an insider was selling shares at slightly below the current price (US$80.25). 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 21% of Charles Hageboeck's stake.

Over the last year we saw more insider selling of City Holding shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NasdaqGS:CHCO Insider Trading Volume May 7th 2021

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insider Ownership of City Holding

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. City Holding insiders own about US$32m worth of shares. That equates to 2.6% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At City Holding Tell Us?

Insiders sold City Holding shares recently, but they didn't buy any. Despite some insider buying, the longer term picture doesn't make us feel much more positive. While insiders do own shares, they don't own a heap, and they have been selling. 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. When we did our research, we found 2 warning signs for City Holding (1 doesn't sit too well with us!) that we believe deserve your full attention.

Of course City Holding may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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, but not derivative transactions.

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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. 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.
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