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 we'll take a look at whether insiders have been buying or selling shares in UMH Properties, Inc. (NYSE:UMH).
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.
We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
The Last 12 Months Of Insider Transactions At UMH Properties
Over the last year, we can see that the biggest insider sale was by the President, Samuel Landy, for US$98k worth of shares, at about US$12.68 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$17.95. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 1.1% of Samuel Landy's holding. Samuel Landy was the only individual insider to sell shares in the last twelve months.
In the last twelve months insiders purchased 16.76k shares for US$206k. But they sold 17.29k shares for US$196k. In total, UMH Properties insiders bought more than they sold over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at UMH Properties Have Bought Stock Recently
Over the last three months, we've seen a bit of insider buying at UMH Properties. Insiders bought US$21k worth of shares in that time. It's great to see that insiders are only buying, not selling. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.
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 7.0% of UMH Properties shares, worth about US$51m. 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 UMH Properties Tell Us?
We note a that there has been a bit of insider buying recently (but no selling). That said, the purchases were not large. On a brighter note, the transactions over the last year are encouraging. Overall we don't see anything to make us think UMH Properties insiders are doubting the company, and they do own shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we found 2 warning signs for UMH Properties that deserve your attention before buying any shares.
But note: UMH Properties 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.
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UMH Properties, Inc., which was organized in 1968, is a public equity REIT that owns and operates 124 manufactured home communities containing approximately 23,400 developed homesites.
Reasonable growth potential average dividend payer.