While Freeport-McMoRan Inc. (NYSE:FCX) shareholders have enjoyed a good week with stock up 6.4%, they need remain vigilant. In spite of the relatively cheap prices, insiders made the decision to sell US$1.1m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
Freeport-McMoRan Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the insider, Gerald Ford, sold US$746k worth of shares at a price of US$40.99 per share. That means that an insider was selling shares at slightly below the current price (US$50.77). 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. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was 100% of Gerald Ford's stake.
In the last year Freeport-McMoRan insiders didn't buy any company stock. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Have Freeport-McMoRan Insiders Traded Recently?
Over the last three months, we've seen a bit of insider selling at Freeport-McMoRan. insider C. Whitmire only netted US$8.5k selling shares, in that period. It's not great to see insider selling, nor the lack of recent buyers. But the amount sold isn't enough for us to put any weight on it.
Does Freeport-McMoRan Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Freeport-McMoRan insiders own 0.4% of the company, currently worth about US$284m 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.
What Might The Insider Transactions At Freeport-McMoRan Tell Us?
Our data shows a little more insider selling, but no insider buying, in the last three months. However, the sales are not big enough to concern us at all. While we feel good about high insider ownership of Freeport-McMoRan, we can't say the same about the selling of shares. 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. Every company has risks, and we've spotted 2 warning signs for Freeport-McMoRan (of which 1 is concerning!) you should know about.
But note: Freeport-McMoRan 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.
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.