In the last year, many Federal Agricultural Mortgage Corporation (NYSE:AGM) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
Check out our latest analysis for Federal Agricultural Mortgage
Federal Agricultural Mortgage Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the President & CEO, Bradford Nordholm, for US$1.3m worth of shares, at about US$180 per share. So we know that an insider sold shares at around the present share price of US$169. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).
In the last twelve months insiders purchased 2.58k shares for US$324k. But they sold 10.82k shares for US$1.8m. Over the last year we saw more insider selling of Federal Agricultural Mortgage shares, than buying. 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!
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Federal Agricultural Mortgage Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Federal Agricultural Mortgage shares. Specifically, insiders ditched US$56k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership Of Federal Agricultural Mortgage
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Federal Agricultural Mortgage insiders own about US$25m worth of shares. That equates to 1.4% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Do The Federal Agricultural Mortgage Insider Transactions Indicate?
Insiders sold stock recently, but they haven't been buying. And our longer term analysis of insider transactions didn't bring confidence, either. But it is good to see that Federal Agricultural Mortgage is growing earnings. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We're in no rush to buy! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that Federal Agricultural Mortgage has 1 warning sign and it would be unwise to ignore this.
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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.