We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in RE/MAX Holdings, Inc. (NYSE:RMAX).
What Is Insider Selling?
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.
See our latest analysis for RE/MAX Holdings
RE/MAX Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Co-Founder & Non-Executive Chairman David Liniger for US$4.5m worth of shares, at about US$32.45 per share. So it’s clear an insider wanted to buy, at around the current price, which is US$38.31. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. While we always like to see insider buying, it’s less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for RE/MAX Holdings share holders is that insiders were buying at near the current price.
In the last twelve months insiders purchased 362.81k shares for US$11m. But they sold 1388 for US$43k. In total, RE/MAX Holdings insiders bought more than they sold over the last year. You can see the insider transactions (by 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!
RE/MAX Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that RE/MAX Holdings insiders own 1.5% of the company, worth about US$18m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At RE/MAX Holdings Tell Us?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in RE/MAX Holdings and we see no evidence to suggest they are worried about the future. Of course, the future is what matters most. So if you are interested in RE/MAX Holdings, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity 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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.