We often see insiders buying up shares in companies that perform well over the long term. 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 Altria Group Inc (NYSE:MO).
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
The Last 12 Months Of Insider Transactions At Altria Group
President & CEO of Altria Group Distribution Company Craig Johnson made the biggest insider sale in the last 12 months. That single transaction was for US$996k worth of shares at a price of US$66.59 each. That means that an insider was selling shares at around the current price of US$53.72. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at that price.
The chart below shows insider transactions over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like Altria Group better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Altria Group Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Altria Group shares. In total, Independent Director Dinyar Devitre dumped US$185k worth of shares in that time, and we didn’t record any purchases whatsoever. In light of this it’s hard to argue that all the directors think that the shares are a bargain.
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Altria Group insiders own about US$100m worth of shares. That equates to 0.1% of the company. While this is strong but not in the top group, when it comes to insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Do The Altria Group Insider Transactions Indicate?
An insider sold Altria Group shares recently, but they didn’t buy any. Furthermore, transactions over the last twelve months dispel the notion that insiders won’t sell readily. When you combine this with the relatively low insider ownership, we are very cautious about the stock. As the saying goes, only fools rush in. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.