When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in FMC Corporation's (NYSE:FMC) instance, it's good news for shareholders.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
FMC Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by President Mark Douglas for US$476k worth of shares, at about US$116 per share. That means that an insider was happy to buy shares at above the current price of US$56.74. It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
In the last twelve months FMC insiders were buying shares, but not selling. Their average price was about US$78.69. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
FMC is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders At FMC Have Bought Stock Recently
Over the last quarter, FMC insiders have spent a meaningful amount on shares. Executive VP & CFO Andrew Sandifer spent US$127k on stock, and there wasn't any selling. This is a positive in our book as it implies some confidence.
Does FMC Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. FMC insiders own about US$37m worth of shares. That equates to 0.5% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The FMC Insider Transactions Indicate?
It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. Given that insiders also own a fair bit of FMC we think they are probably pretty confident of a bright future. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For instance, we've identified 4 warning signs for FMC (3 are a bit unpleasant) you should be aware of.
Of course FMC may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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 of direct interests only, but not derivative transactions or indirect interests.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.