Despite the fact that EMCOR Group, Inc. (NYSE:EME) stock rose 10% last week, insiders who sold US$5.4m worth of stock in the previous 12 months are likely to be better off. Selling at an average price of US$189, which is higher than the current price, may have been the best move for these insiders because their investment would have been worth less now than when they sold.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
The Last 12 Months Of Insider Transactions At EMCOR Group
The Executive Vice President of Shared Services, R. Matz, made the biggest insider sale in the last 12 months. That single transaction was for US$3.2m worth of shares at a price of US$211 each. That means that an insider was selling shares at slightly below the current price (US$277). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. 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 8.5% of R. Matz's holding. R. Matz was the only individual insider to sell shares in the last twelve months.
R. Matz ditched 28.46k shares over the year. The average price per share was US$189. 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!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Does EMCOR Group Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. EMCOR Group insiders own about US$171m worth of shares (which is 1.3% of the company). 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 Do The EMCOR Group Insider Transactions Indicate?
It doesn't really mean much that no insider has traded EMCOR Group shares in the last quarter. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the EMCOR Group insiders selling. Of course, the future is what matters most. So if you are interested in EMCOR Group, you should check out this free report on analyst forecasts for the company.
But note: EMCOR Group 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.