Palomar Holdings Insiders Sell US$11m Of Stock, Possibly Signalling Caution

The fact that multiple Palomar Holdings, Inc. (NASDAQ:PLMR) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

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Palomar Holdings Insider Transactions Over The Last Year

Notably, that recent sale by Founder D. Armstrong was not the only time they sold Palomar Holdings shares this year. Earlier in the year, they fetched US$92.83 per share in a -US$1.1m sale. That means that even when the share price was below the current price of US$134, 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. We note that the biggest single sale was only 2.4% of D. Armstrong's holding.

In total, Palomar Holdings insiders sold more than they bought over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

View our latest analysis for Palomar Holdings

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Palomar Holdings Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Palomar Holdings. Specifically, insiders ditched US$3.3m 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 Palomar Holdings Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 2.4% of Palomar Holdings shares, worth about US$85m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Palomar Holdings Insiders?

Insiders sold Palomar Holdings shares recently, but they didn't buy any. Zooming out, the longer term picture doesn't give us much comfort. On the plus side, Palomar Holdings makes money, and is growing profits. While insiders do own shares, they don't own a heap, and they have been selling. So we'd only buy after careful consideration. 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. You'd be interested to know, that we found 1 warning sign for Palomar Holdings and we suggest you have a look.

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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.