Yahoo Finance Hiscox Ltd (LON:HSX) Insiders Have Been Selling
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 we’ll take a look at whether insiders have been buying or selling shares in Hiscox Ltd (LON:HSX).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
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 Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
See our latest analysis for Hiscox
Hiscox Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Non-Executive Chairman of the Board Robert Childs for UK£1.2m worth of shares, at about UK£15.01 per share. That means that an insider was selling shares at slightly below the current price (UK£15.72). While their view may have changed since they sold, this isn’t a particularly bullish sign. When an insider sells below the current price, it does tend to make us wonder about the current valuation. We note that the biggest single sale was only 5.8% of Robert Childs’s holding.
In the last twelve months insiders purchased 24.10k shares for UK£377k. But insiders sold 175.00k shares worth UK£2.8m. In total, Hiscox insiders sold more than they bought over the last year. The average sell price was around US$15.91. We don’t gain confidence from insider selling below the recent share price. Since insiders sell for many reasons, we wouldn’t put too much weight on it. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Hiscox Insiders Are Selling The Stock
Over the last three months, we’ve seen notably more insider selling, than insider buying, at Hiscox. In that time, insiders dumped US$737k worth of shares. On the flip side, insiders spent US$193k on purchasing shares. Since the selling really does outweigh the buying, we’d say that these transactions may suggest that some insiders feel the shares are not cheap.
Insider Ownership
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 Hiscox insiders own 1.9% of the company, worth about UK£87m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Hiscox Insiders?
Unfortunately, there has been more insider selling of Hiscox stock, than buying, in the last three months. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. But since Hiscox is profitable and growing, we’re not too worried by this. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. So we’d only buy after careful consideration. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course Hiscox may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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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.
