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 President, Adam Pollitzer, recently sold a substantial US$2.1m worth of stock at a price of US$36.54 per share. That's a big disposal, and it decreased their holding size by 23%, which is notable but not too bad.

We've discovered 1 warning sign about NMI Holdings. View them for free.

NMI Holdings Insider Transactions Over The Last Year

Notably, that recent sale by Adam Pollitzer is the biggest insider sale of NMI Holdings shares that we've seen in the last year. That means that an insider was selling shares at slightly below the current price (US$37.48). 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 23% of Adam Pollitzer's holding.

NMI Holdings insiders didn't buy any shares over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

View our latest analysis for NMI Holdings

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Does NMI Holdings Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that NMI Holdings insiders own 1.7% of the company, worth about US$51m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About NMI Holdings Insiders?

Insiders 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 NMI Holdings is profitable and growing, we're not too worried by this. While insiders do own shares, they don't own a heap, and they have been selling. So we'd only buy after careful consideration. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Case in point: We've spotted 1 warning sign for NMI Holdings you should be aware of.

Of course NMI Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.