We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 before you buy or sell Fidelity National Information Services, Inc. (NYSE:FIS), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Fidelity National Information Services
Over the last year, we can see that the biggest insider sale was by Director James Stallings for US$200k worth of shares, at about US$109 per share. That means that even when the share price was below the current price of US$114, an insider wanted to cash in some shares. Even though it doesn’t necessarily mean anything, that’s certainly not a positive sign, in our book. As a general rule we consider it to be discouraging when insiders are selling below the current price. Please note, however, that this single sale was just 17% of James Stallings’s stake.
All up, insiders sold more shares in Fidelity National Information Services than they bought, over the last year. The sellers received a price of around US$107, on average. It’s not particularly great to see insiders were selling shares at below recent prices. Since insiders sell for many reasons, we wouldn’t put too much weight on it. 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!
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Insider Ownership of Fidelity National Information Services
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. It’s great to see that Fidelity National Information Services insiders own 0.6% of the company, worth about US$232m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Fidelity National Information Services Tell Us?
It doesn’t really mean much that no insider has traded Fidelity National Information Services shares in the last quarter. It’s great to see high levels of insider ownership, but looking back at the last year, we don’t gain confidence from the Fidelity National Information Services insiders selling. Of course, the future is what matters most. So if you are interested in Fidelity National Information Services, you should check out this free report on analyst forecasts for the company.
But note: Fidelity National Information Services 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.
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