We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Diamond Hill Investment Group, Inc. (NASDAQ:DHIL), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
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The Last 12 Months Of Insider Transactions At Diamond Hill Investment Group
In the last twelve months, the biggest single sale by an insider was when Chairman of the Board Roderick Dillon sold US$779k worth of shares at a price of US$215 per share. That is hardly a positive sign, even though it took place above the latest price (US$157). So it is hard to draw any strong conclusion from it.
Over the last year, we note insiders sold 10.12k shares worth US$2.0m. Over the last year we saw more insider selling of Diamond Hill Investment Group shares, than buying. They sold for an average price of about US$196. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is US$157). You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Diamond Hill Investment Group better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Diamond Hill Investment Group Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Diamond Hill Investment Group shares. Specifically, Roderick Dillon ditched US$418k worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
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. A high insider ownership often makes company leadership more mindful of shareholder interests. Diamond Hill Investment Group insiders own about US$35m worth of shares. That equates to 6.8% of the company. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Diamond Hill Investment Group Insider Transactions Indicate?
An insider sold stock recently, but they haven’t been buying. Looking to the last twelve months, our data doesn’t show any insider buying. But since Diamond Hill Investment 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. So we’d only buy after careful consideration. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
Of course Diamond Hill Investment Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.