Insiders At Federal Agricultural Mortgage Sold US$1.8m In Stock, Alluding To Potential Weakness

The fact that multiple Federal Agricultural Mortgage Corporation (NYSE:AGM) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Federal Agricultural Mortgage

Federal Agricultural Mortgage Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the President & CEO, Bradford Nordholm, for US$1.3m worth of shares, at about US$180 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$197. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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 38% of Bradford Nordholm's holding.

Happily, we note that in the last year insiders paid US$102k for 765.45 shares. On the other hand they divested 10.63k shares, for US$1.8m. In total, Federal Agricultural Mortgage insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. 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 growing companies with considerable, recent, insider buying.

Insiders At Federal Agricultural Mortgage Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Federal Agricultural Mortgage. In total, Independent Director Chester Culver dumped US$58k 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.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Federal Agricultural Mortgage insiders own about US$27m worth of shares. That equates to 1.3% 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.

So What Do The Federal Agricultural Mortgage Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But it is good to see that Federal Agricultural Mortgage is growing earnings. While insiders do own shares, they don't own a heap, and they have been selling. We'd practice some caution before buying! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Federal Agricultural Mortgage. Every company has risks, and we've spotted 1 warning sign for Federal Agricultural Mortgage you should know about.

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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