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 before you buy or sell CIT Group Inc. (NYSE:CIT), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
CIT Group Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Matthew Galligan sold US$273k worth of shares at a price of US$50.82 per share. So we know that an insider sold shares at around the present share price of US$46.11. While their view may have changed since the sale, this is not a particularly positive fact. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.
We note that in the last year insiders divested 16.01k shares for a total of US$817k. Over the last year we saw more insider selling of CIT Group shares, than buying. They sold for an average price of about US$51.06. It’s not particularly great to see insiders were selling shares around current prices. Since insiders sell for many reasons, we wouldn’t put too much weight on it. You can see the insider transactions (by individuals) over the last year depicted in the chart 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.
CIT Group Insiders Are Selling The Stock
The last quarter saw substantial insider selling of CIT Group shares. In total, insiders dumped US$552k 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 of CIT Group
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. Insiders own 0.6% of CIT Group shares, worth about US$26m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At CIT Group Tell Us?
Insiders haven’t bought CIT Group stock in the last three months, but there was some selling. And there weren’t any purchases to give us comfort, over the last year. But since CIT Group is profitable and growing, we’re not too worried by this. Insiders own shares, but we’re still pretty cautious, given the history of sales. We’re in no rush to buy! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for CIT Group.
Of course CIT Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.