Don't Ignore The Insider Selling In NMI Holdings

Some NMI Holdings, Inc. (NASDAQ:NMIH) shareholders may be a little concerned to see that the Independent Lead Director, Steven Scheid, recently sold a substantial US$783k worth of stock at a price of US$39.31 per share. That's a big disposal, and it decreased their holding size by 20%, which is notable but not too bad.

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The Last 12 Months Of Insider Transactions At NMI Holdings

Over the last year, we can see that the biggest insider sale was by the President, Adam Pollitzer, for US$2.1m worth of shares, at about US$36.54 per share. That means that even when the share price was below the current price of US$39.46, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent 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 23% of Adam Pollitzer's holding.

Insiders in NMI Holdings didn't buy any shares in the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for NMI Holdings

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Insider Ownership Of NMI Holdings

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 1.6% of NMI Holdings shares, worth about US$50m. 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 NMI Holdings Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. On the plus side, NMI Holdings makes money, and is growing profits. Insiders own shares, but we're still pretty cautious, given the history of sales. We'd practice some caution before buying! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing NMI Holdings. In terms of investment risks, we've identified 1 warning sign with NMI Holdings and understanding this 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.