Over the past year, insiders sold US$17m worth of CME Group Inc. (NASDAQ:CME) stock at an average price of US$228 per share allowing them to get the most out of their money. After the stock price dropped 5.5% last week, the company's market value declined by US$3.8b, but insiders were able to mitigate their losses.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for CME Group
The Last 12 Months Of Insider Transactions At CME Group
The insider, Kevin Kometer, made the biggest insider sale in the last 12 months. That single transaction was for US$3.3m worth of shares at a price of US$245 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (US$181). So it may not tell us anything about how insiders feel about the current share price.
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 click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders At CME Group Have Sold Stock Recently
Over the last three months, we've seen significant insider selling at CME Group. In total, insiders sold US$2.1m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership Of CME Group
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that CME Group insiders own 0.3% of the company, worth about US$221m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Do The CME Group Insider Transactions Indicate?
Insiders sold stock recently, but they haven't been buying. Zooming out, the longer term picture doesn't give us much comfort. But it is good to see that CME Group is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing CME Group. At Simply Wall St, we found 2 warning signs for CME Group that deserve your attention before buying any shares.
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, but not derivative transactions.
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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.
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