Don't Ignore The Insider Selling In KKR

We wouldn't blame KKR & Co. Inc. (NYSE:KKR) shareholders if they were a little worried about the fact that George Roberts, the Co-Founder & Executive Co-Chairman recently netted about US$117m selling shares at an average price of US$144. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 1.0%.

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The Last 12 Months Of Insider Transactions At KKR

In the last twelve months, the biggest single sale by an insider was when the Co-Founder & Executive Co-Chairman, Henry Kravis, sold US$154m worth of shares at a price of US$122 per share. That means that even when the share price was below the current price of US$142, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 1.6% of Henry Kravis's holding.

In the last twelve months insiders purchased 48.25k shares for US$5.6m. On the other hand they divested 3.28m shares, for US$413m. All up, insiders sold more shares in KKR than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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Insider Ownership

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that KKR insiders own 23% of the company, worth about US$29b. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About KKR Insiders?

The stark truth for KKR is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. It is good to see high insider ownership, but the insider selling leaves us cautious. 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. In terms of investment risks, we've identified 2 warning signs with KKR and understanding them should be part of your investment process.

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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.