Insiders At Kinder Morgan Sold US$3.7m In Stock, Alluding To Potential Weakness

Many Kinder Morgan, Inc. (NYSE:KMI) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. 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, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Kinder Morgan

The Last 12 Months Of Insider Transactions At Kinder Morgan

In the last twelve months, the biggest single sale by an insider was when the Independent Lead Director, Michael Morgan, sold US$1.3m worth of shares at a price of US$18.82 per share. That means that an insider was selling shares at slightly below the current price (US$19.74). 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. This single sale was just 16% of Michael Morgan's stake.

Kinder Morgan insiders didn't buy any shares 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!

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Insiders At Kinder Morgan Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Kinder Morgan. In total, Independent Lead Director Michael Morgan sold US$1.3m 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 Kinder Morgan 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. Kinder Morgan insiders own 13% of the company, currently worth about US$5.6b based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Kinder Morgan Insiders?

An insider sold Kinder Morgan shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. 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. At Simply Wall St, we've found that Kinder Morgan has 3 warning signs (2 are a bit unpleasant!) that deserve your attention before going any further with your analysis.

Of course Kinder Morgan 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.