Have Insiders Been Selling Cherry Hill Mortgage Investment Corporation (NYSE:CHMI) Shares?

By
Simply Wall St
Published
March 02, 2021
NYSE:CHMI

It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Cherry Hill Mortgage Investment Corporation (NYSE:CHMI).

What Is Insider Buying?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. 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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

View our latest analysis for Cherry Hill Mortgage Investment

The Last 12 Months Of Insider Transactions At Cherry Hill Mortgage Investment

The Independent Director, Regina Lowrie, made the biggest insider sale in the last 12 months. That single transaction was for US$100k worth of shares at a price of US$8.92 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$10.04. 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. This single sale was just 50% of Regina Lowrie's stake. Regina Lowrie was the only individual insider to sell over the last year.

In the last twelve months insiders purchased 3.27k shares for US$42k. But insiders sold 11.19k shares worth US$100k. 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!

insider-trading-volume
NYSE:CHMI Insider Trading Volume March 2nd 2021

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Does Cherry Hill Mortgage Investment 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. From looking at our data, insiders own US$1.0m worth of Cherry Hill Mortgage Investment stock, about 0.6% of the company. We prefer to see high levels of insider ownership.

What Might The Insider Transactions At Cherry Hill Mortgage Investment Tell Us?

The fact that there have been no Cherry Hill Mortgage Investment insider transactions recently certainly doesn't bother us. We don't take much encouragement from the transactions by Cherry Hill Mortgage Investment insiders. And usually insiders own more stock in the company, according to our data. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To that end, you should learn about the 4 warning signs we've spotted with Cherry Hill Mortgage Investment (including 2 which are potentially serious).

Of course Cherry Hill Mortgage Investment 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, but not derivative transactions.

Promoted
If you decide to trade Cherry Hill Mortgage Investment, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account.


This article by Simply Wall St is general in nature. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020


Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.


Simply Wall St character - Warren

Simply Wall St

Simply Wall St is a financial technology startup focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of equity analysts with a public, market-beating track record. Learn more about the team behind Simply Wall St.