It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Virtu Financial, Inc. (NASDAQ:VIRT).
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
Virtu Financial Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when CEO & Director Douglas Cifu bought US$2.2m worth of shares at a price of US$22.48 per share. We do like to see buying, but this purchase was made at well below the current price of US$27.90. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Virtu Financial Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at Virtu Financial. In total, Co-President & Co-COO Brett Fairclough sold US$1.4m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Does Virtu Financial Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Virtu Financial insiders own about US$38m worth of shares. That equates to 0.7% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Virtu Financial Tell Us?
An insider hasn't bought Virtu Financial stock in the last three months, but there was some selling. In contrast, they appear keener if you look at the last twelve months. It's good to see insiders are shareholders. So we're not overly bothered by recent selling. 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. For instance, we've identified 4 warning signs for Virtu Financial (1 makes us a bit uncomfortable) you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.
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