We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Kingsway Financial Services Inc. (NYSE:KFS).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Kingsway Financial Services Insider Transactions Over The Last Year
The insider Charles Frischer made the biggest insider purchase in the last 12 months. That single transaction was for US$598k worth of shares at a price of US$2.74 each. Even though the purchase was made at a significantly lower price than the recent price (US$4.51), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
While Kingsway Financial Services insiders bought shares during the last year, they didn't sell. They paid about US$2.02 on average. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Kingsway Financial Services is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Kingsway Financial Services Insiders Bought Stock Recently
Over the last three months, we've seen a bit of insider buying at Kingsway Financial Services. Insiders purchased US$26k worth of shares in that period. It's great to see that insiders are only buying, not selling. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.
Does Kingsway Financial Services Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Kingsway Financial Services insiders own about US$29m worth of shares. That equates to 29% 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 Does This Data Suggest About Kingsway Financial Services Insiders?
We note a that there has been a bit of insider buying recently (but no selling). The net investment is not enough to encourage us much. However, our analysis of transactions over the last year is heartening. Overall we don't see anything to make us think Kingsway Financial Services insiders are doubting the company, and they do own shares. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example, Kingsway Financial Services has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.
But note: Kingsway Financial Services 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.
This article by Simply Wall St is general in nature. 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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