Trade Alert: Chief Information Officer Of CME Group Sunil Cutinho Has Sold Stock

We wouldn't blame CME Group Inc. (NASDAQ:CME) shareholders if they were a little worried about the fact that Sunil Cutinho, the Chief Information Officer recently netted about US$3.2m selling shares at an average price of US$271. That sale reduced their total holding by 41% which is hardly insignificant, but far from the worst we've seen.

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CME Group Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Chairman & CEO, Terrence Duffy, sold US$7.8m worth of shares at a price of US$259 per share. That means that even when the share price was below the current price of US$270, 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. 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 36% of Terrence Duffy's holding.

Over the last year, we can see that insiders have bought 2.55k shares worth US$600k. But insiders sold 106.17k shares worth US$27m. Over the last year we saw more insider selling of CME Group 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!

See our latest analysis for CME Group

I will like CME Group 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.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. CME Group insiders own about US$297m 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.

What Might The Insider Transactions At CME Group Tell Us?

The stark truth for CME Group is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But it is good to see that CME Group is growing earnings. 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. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing CME Group. Case in point: We've spotted 2 warning signs for CME Group you should be aware of.

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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.