We wouldn't blame CME Group Inc. (NASDAQ:CME) shareholders if they were a little worried about the fact that Sunil Cutinho, the Chief Information Officer recently netted about US$1.0m selling shares at an average price of US$227. That sale reduced their total holding by 14% which is hardly insignificant, but far from the worst we've seen.
CME Group Insider Transactions Over The Last Year
The Chairman & CEO, Terrence Duffy, made the biggest insider sale in the last 12 months. That single transaction was for US$8.4m worth of shares at a price of US$211 each. That means that even when the share price was below the current price of US$225, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 37% of Terrence Duffy's holding.
In total, CME Group insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. 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 that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).
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. I reckon it's a good sign if insiders own a significant number of shares in the company. CME Group insiders own 0.3% of the company, currently worth about US$273m based on the recent share price. 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 CME Group Tell Us?
The insider sales have outweighed the insider buying, at CME Group, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, CME Group makes money, and is growing profits. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 2 warning signs for CME Group you should be aware of.
But note: CME Group 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 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.
