UMB Financial Insiders Sold US$19m Of Shares Suggesting Hesitancy

The fact that multiple UMB Financial Corporation (NASDAQ:UMBF) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for UMB Financial

UMB Financial Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Chairman & CEO, J. Kemper, for US$2.5m worth of shares, at about US$103 per share. That means that even when the share price was slightly below the current price of US$104, an insider wanted to cash in some shares. 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. 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. This single sale was just 1.3% of J. Kemper's stake.

Over the last year, we can see that insiders have bought 2.11k shares worth US$177k. But insiders sold 208.50k shares worth US$19m. In total, UMB Financial insiders sold more than they bought over the last year. The sellers received a price of around US$89.74, on average. It's not too encouraging to see that insiders have sold at below the current price. Since insiders sell for many reasons, we wouldn't put too much weight on it. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like UMB Financial 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.

UMB Financial Insiders Are Selling The Stock

There was substantially more insider selling, than buying, of UMB Financial shares over the last three months. In that time, insiders dumped US$10m worth of shares. Meanwhile insiders bought US$96k worth. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.

Does UMB Financial Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company 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. UMB Financial insiders own 4.6% of the company, currently worth about US$236m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The UMB Financial Insider Transactions Indicate?

The stark truth for UMB Financial is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. On the plus side, UMB Financial 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. 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 assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of UMB Financial.

Of course UMB Financial 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 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.