Many Palomar Holdings, Inc. (NASDAQ:PLMR) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, if numerous insiders are selling, shareholders should investigate more.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

The Last 12 Months Of Insider Transactions At Palomar Holdings

Over the last year, we can see that the biggest insider sale was by the Founder, D. Armstrong, for US$4.6m worth of shares, at about US$58.65 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$85.67. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 14% of D. Armstrong's holding.

Over the last year we saw more insider selling of Palomar Holdings shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. 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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Insiders At Palomar Holdings Have Sold Stock Recently

We've seen more insider selling than insider buying at Palomar Holdings recently. In that time, insiders dumped US$2.3m worth of shares. Meanwhile Independent Director Thomas Bradley bought US$84k worth. Generally this level of net selling might be considered a bit bearish.

Insider Ownership Of Palomar Holdings

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Palomar Holdings insiders own about US$56m worth of shares. That equates to 2.7% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Palomar Holdings Insider Transactions Indicate?

The stark truth for Palomar Holdings 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. On the plus side, Palomar Holdings makes money, and is growing profits. Insiders own shares, but we're still pretty cautious, given the history of sales. We'd practice some caution before buying! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 1 warning sign with Palomar Holdings and understanding it should be part of your investment process.

Of course Palomar Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality 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 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com