Don't Ignore The Insider Selling In Brown & Brown

We wouldn't blame Brown & Brown, Inc. (NYSE:BRO) shareholders if they were a little worried about the fact that J. Brown, the Chairman of the Board recently netted about US$47m selling shares at an average price of US$112. However, that sale only accounted for 1.1% of their holding, so arguably it doesn't say much about their conviction.

View our latest analysis for Brown & Brown

Brown & Brown Insider Transactions Over The Last Year

Notably, that recent sale by J. Brown is the biggest insider sale of Brown & Brown shares that we've seen in the last year. That means that an insider was selling shares at below the current price (US$113). 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. 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. It is worth noting that this sale was only 1.1% of J. Brown's holding.

Brown & Brown insiders didn't buy any shares 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!

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

Insider Ownership Of Brown & Brown

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Brown & Brown insiders own 17% of the company, currently worth about US$5.4b based on the recent share price. 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 Does This Data Suggest About Brown & Brown Insiders?

An insider hasn't bought Brown & Brown 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 since Brown & Brown is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Brown & Brown. Case in point: We've spotted 2 warning signs for Brown & Brown you should be aware of.

Of course Brown & Brown 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.