Did Cincinnati Financial Corporation (NASDAQ:CINF) Insiders Sell Shares?

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 we'll take a look at whether insiders have been buying or selling shares in Cincinnati Financial Corporation (NASDAQ:CINF).

Do Insider Transactions Matter?

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, rules govern insider transactions, and certain disclosures are required.

Insider transactions are not the most important thing when it comes to long-term investing. 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'.

Check out our latest analysis for Cincinnati Financial

The Last 12 Months Of Insider Transactions At Cincinnati Financial

Over the last year, we can see that the biggest insider sale was by the Chief Risk Officer & Senior VP of the Cincinnati Insurance Co., Teresa Cracas, for US$8.3m worth of shares, at about US$82.82 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$92.42. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was 76% of Teresa Cracas's holding. The only individual insider seller over the last year was Teresa Cracas.

Over the last year, we can see that insiders have bought 15.17k shares worth US$1.2m. On the other hand they divested 100.00k shares, for US$8.3m. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

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 Cincinnati Financial insiders own 3.3% of the company, worth about US$492m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Cincinnati Financial Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Cincinnati Financial insiders selling. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Cincinnati Financial. Case in point: We've spotted 2 warning signs for Cincinnati Financial you should be aware of, and 1 of these is a bit unpleasant.

But note: Cincinnati Financial may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.

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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.
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