Over the past year, many UMB Financial Corporation (NASDAQ:UMBF) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
View our latest analysis for UMB Financial
The Last 12 Months Of Insider Transactions At UMB Financial
Over the last year, we can see that the biggest insider sale was by the Chairman, J. Kemper, for US$1.6m worth of shares, at about US$90.25 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$63.75. So it is hard to draw any strong conclusion from it.
Happily, we note that in the last year insiders paid US$851k for 13.01k shares. But they sold 119.50k shares for US$9.2m. Over the last year we saw more insider selling of UMB Financial shares, than buying. The average sell price was around US$76.95. It is certainly not great to see that insiders have sold shares in the company. But we note that the selling, on average, was at well above the recently traded price of US$63.75. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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UMB Financial Insiders Are Selling The Stock
Over the last three months, we've seen notably more insider selling, than insider buying, at UMB Financial. In total, insiders sold US$3.5m worth of shares in that time. On the flip side, insiders spent US$41k 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 Of UMB Financial
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. UMB Financial insiders own about US$155m worth of shares (which is 5.1% of the company). 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 UMB Financial Tell Us?
The stark truth for UMB Financial is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. 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. Case in point: We've spotted 2 warning signs for UMB Financial you should be aware of, and 1 of them doesn't sit too well with us.
But note: UMB Financial 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.