We wouldn’t blame Fidelity National Financial, Inc. (NYSE:FNF) shareholders if they were a little worried about the fact that Cary Thompson, the Independent Director recently netted about US$665k selling shares at an average price of US$39.09. That’s a big disposal, and it decreased their holding size by 22%, which is notable but not too bad.
The Last 12 Months Of Insider Transactions At Fidelity National Financial
In the last twelve months, the biggest single sale by an insider was when the Executive VP, Michael Gravelle, sold US$1.8m worth of shares at a price of US$31.84 per share. That means that even when the share price was below the current price of US$37.23, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it’s only a weak signal. We note that the biggest single sale was only 20% of Michael Gravelle’s holding.
All up, insiders sold more shares in Fidelity National Financial than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Fidelity National Financial better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Fidelity National Financial insiders own 4.9% of the company, currently worth about US$532m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Fidelity National Financial Insiders?
Unfortunately, there has been more insider selling of Fidelity National Financial stock, than buying, in the last three months. And our longer term analysis of insider transactions didn’t bring confidence, either. But it is good to see that Fidelity National Financial is growing earnings. The company boasts high insider ownership, but we’re a little hesitant, given the history of share sales. 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, Fidelity National Financial has 3 warning signs (and 1 which can’t be ignored) we think you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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