Trade Alert: Chairman & CEO Of CME Group Terrence Duffy Has Sold Stock

We wouldn't blame CME Group Inc. (NASDAQ:CME) shareholders if they were a little worried about the fact that Terrence Duffy, the Chairman & CEO recently netted about US$7.8m selling shares at an average price of US$259. That sale reduced their total holding by 36% which is hardly insignificant, but far from the worst we've seen.

Check out our latest analysis for CME Group

The Last 12 Months Of Insider Transactions At CME Group

In fact, the recent sale by Chairman & CEO Terrence Duffy was not their only sale of CME Group shares this year. Earlier in the year, they fetched US$211 per share in a -US$8.4m sale. That means that an insider was selling shares at slightly below the current price (US$264). 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. It is worth noting that this sale was only 37% of Terrence Duffy's holding.

In the last twelve months insiders purchased 2.63k shares for US$584k. On the other hand they divested 132.05k shares, for US$31m. In total, CME Group insiders sold more than they bought over the last year. 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!

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Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. CME Group insiders own about US$283m worth of shares (which is 0.3% of the company). 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 Does This Data Suggest About CME Group Insiders?

The stark truth for CME Group 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, CME Group makes money, and is growing profits. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. In terms of investment risks, we've identified 2 warning signs with CME Group and understanding these should be part of your investment process.

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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.