Should You Be Worried About Insider Transactions At UDR, Inc. (NYSE:UDR)?

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell UDR, Inc. (NYSE:UDR), you may well want to know whether insiders have been buying or selling.

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'

View our latest analysis for UDR

The Last 12 Months Of Insider Transactions At UDR

Over the last year, we can see that the biggest insider sale was by Senior EVP Warren Troupe for US$2.2m worth of shares, at about US$44.66 per share. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of US$44.98. While sellers have a variety of reasons for selling, this isn't particularly great to see. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price. We note that the biggest single sale was only 9.2% of Warren Troupe's holding.

In the last twelve months insiders netted US$12m for 297.06k shares sold. In total, UDR insiders sold more than they bought over the last year. The sellers received a price of around US$39.70, on average. We don't gain much confidence from insider selling near the recent share price. But we don't put too much weight on the insider selling, since sellers could have personal reasons. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

For those who like to find winning investments this freelist of growing companies with recent insider purchasing, could be just the ticket.

UDR Insiders Are Selling The Stock

The last three months saw significant insider selling at UDR. In total, insiders sold US$2.8m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the directors think that the shares are a bargain.

Insider Ownership of UDR

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. UDR insiders own about US$158m worth of shares (which is 1.2% of the company). 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 UDR Insiders?

Insiders haven't bought UDR 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. On the plus side, UDR makes money, and is growing profits. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. Of course, the future is what matters most. So if you are interested in UDR, you should check out this freereport on analyst forecasts for the company.

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

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.

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. Thank you for reading.