We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Vector Group Ltd. (NYSE:VGR).
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
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. For example, a Colombia 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’.
Vector Group Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by President Howard Lorber for US$9.9m worth of shares, at about US$14.18 per share. That is hardly a positive sign, even though it took place above the latest price (US$9.95). So it may not tell us anything about how insiders feel about the current share price.
We note that in the last year insiders divested 1.60m shares for a total of US$21m. Over the last year we saw more insider selling of Vector Group shares, than buying. They sold for an average price of about US$13.39. We are not joyful about insider selling. But we note that the selling, on average, was at well above the recently traded price of US$9.95. The chart below shows insider transactions 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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Vector Group Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at Vector Group. Specifically, insiders ditched US$21m 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.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Vector Group insiders own about US$168m worth of shares (which is 11% of the company). 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 Do The Vector Group Insider Transactions Indicate?
Insiders haven’t bought Vector Group stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn’t show any insider buying. But it is good to see that Vector Group is growing earnings. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about the company. Of course, the future is what matters most. So if you are interested in Vector Group, you should check out this free report on analyst forecasts for the company.
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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 firstname.lastname@example.org.