Don't Ignore The Insider Selling In Federal Agricultural Mortgage

We'd be surprised if Federal Agricultural Mortgage Corporation (NYSE:AGM) shareholders haven't noticed that the Independent Director, Mitchell Johnson, recently sold US$419k worth of stock at US$210 per share. The eyebrow raising move amounted to a reduction of 14% in their holding.

See our latest analysis for Federal Agricultural Mortgage

The Last 12 Months Of Insider Transactions At Federal Agricultural Mortgage

Notably, that recent sale by Mitchell Johnson is the biggest insider sale of Federal Agricultural Mortgage shares that we've seen in the last year. So what is clear is that an insider saw fit to sell at around the current price of US$208. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.

Over the last year, we can see that insiders have bought 555.97 shares worth US$70k. But insiders sold 7.58k shares worth US$1.5m. All up, insiders sold more shares in Federal Agricultural Mortgage than they bought, over the last year. The average sell price was around US$198. It's not particularly great to see insiders were selling shares at below recent prices. But we wouldn't put too much weight on the insider selling. 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!

I will like Federal Agricultural Mortgage 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.

Does Federal Agricultural Mortgage Boast High Insider Ownership?

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. We usually like to see fairly high levels of insider ownership. It appears that Federal Agricultural Mortgage insiders own 1.5% of the company, worth about US$33m. 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 Do The Federal Agricultural Mortgage Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. Zooming out, the longer term picture doesn't give us much comfort. But since Federal Agricultural Mortgage 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. We're in no rush to buy! While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. To that end, you should learn about the 2 warning signs we've spotted with Federal Agricultural Mortgage (including 1 which makes us a bit uncomfortable).

Of course Federal Agricultural Mortgage 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.