Over the past year, many PennyMac Financial Services, Inc. (NYSE:PFSI) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. 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 do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for PennyMac Financial Services
The Last 12 Months Of Insider Transactions At PennyMac Financial Services
Over the last year, we can see that the biggest insider sale was by the Independent Director, Joseph Mazzella, for US$4.1m worth of shares, at about US$58.67 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$68.69. 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. It is worth noting that this sale was only 18% of Joseph Mazzella's holding.
In the last year PennyMac Financial Services insiders didn't buy any company stock. 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!
I will like PennyMac Financial Services better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
PennyMac Financial Services Insiders Are Selling The Stock
The last three months saw significant insider selling at PennyMac Financial Services. In total, insiders sold US$4.9m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Insider Ownership Of PennyMac Financial Services
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. PennyMac Financial Services insiders own 9.7% of the company, currently worth about US$333m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At PennyMac Financial Services Tell Us?
Insiders sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. It is good to see high insider ownership, but the insider selling leaves us cautious. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We've spotted 3 warning signs for PennyMac Financial Services you should be aware of, and 1 of these doesn't sit too well with us.
But note: PennyMac 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 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.
