The recent price decline of 5.5% in Federal Agricultural Mortgage Corporation’s (NYSE:AGM) stock may have disappointed insiders who bought US$740k worth of shares at an average price of US$106 in the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth US$702k, which is not great.
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.
Federal Agricultural Mortgage Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Independent Director James Engebretsen bought US$507k worth of shares at a price of US$102 per share. That means that even when the share price was higher than US$100 (the recent price), an insider wanted to purchase shares. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
Happily, we note that in the last year insiders paid US$740k for 7.00k shares. On the other hand they divested 2.19k shares, for US$232k. In total, Federal Agricultural Mortgage insiders bought more than they sold 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!
Federal Agricultural Mortgage is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Federal Agricultural Mortgage Have Bought Stock Recently
Over the last three months, we’ve seen significantly more insider buying, than insider selling, at Federal Agricultural Mortgage. In total, Independent Director Robert Sexton bought US$233k worth of shares in that time. On the other hand, Executive VP & Chief Business Officer Zachary Carpenter netted US$45k by selling. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
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. Insiders own 1.5% of Federal Agricultural Mortgage shares, worth about US$17m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Federal Agricultural Mortgage Tell Us?
It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. When combined with notable insider ownership, these factors suggest Federal Agricultural Mortgage insiders are well aligned, and that they may think the share price is too low. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing Federal Agricultural Mortgage. Case in point: We’ve spotted 1 warning sign for Federal Agricultural Mortgage you should be aware of.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity 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.