Should You Take Comfort From Insider Transactions At Macy's, Inc. (NYSE:M)?

By
Simply Wall St
Published
June 01, 2021
NYSE:M

We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Macy's, Inc. (NYSE:M).

What Is Insider Buying?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 Macy's

Macy's Insider Transactions Over The Last Year

The Independent Director Paul Varga made the biggest insider purchase in the last 12 months. That single transaction was for US$511k worth of shares at a price of US$15.53 each. We do like to see buying, but this purchase was made at well below the current price of US$18.50. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

Paul Varga purchased 39.63k shares over the year. The average price per share was US$15.41. 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!

insider-trading-volume
NYSE:M Insider Trading Volume June 2nd 2021

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Does Macy's Boast High 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. We usually like to see fairly high levels of insider ownership. From our data, it seems that Macy's insiders own 0.1% of the company, worth about US$7.1m. We do generally prefer see higher levels of insider ownership.

So What Do The Macy's Insider Transactions Indicate?

The fact that there have been no Macy's insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. While we have no worries about the insider transactions, we'd be more comfortable if they owned more Macy's stock. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Macy's. Every company has risks, and we've spotted 1 warning sign for Macy's you should know about.

But note: Macy's 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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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. 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.
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