Over the past year, many CMS Energy Corporation (NYSE:CMS) insiders sold a significant stake in the company which may have piqued investors' interest. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

The Last 12 Months Of Insider Transactions At CMS Energy

Over the last year, we can see that the biggest insider sale was by the Independent Chairman of the Board, John Russell, for US$1.1m worth of shares, at about US$55.59 per share. That means that even when the share price was below the current price of US$60.30, 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 10% of John Russell's holding.

Insiders in CMS Energy didn't buy any shares in the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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Insiders At CMS Energy Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at CMS Energy. In total, Senior Vice President of Sustainability & External Affairs Brandon Hofmeister sold US$202k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership Of CMS Energy

Many investors like to check how much of a company is owned by 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. CMS Energy insiders own about US$92m worth of shares. That equates to 0.5% 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 Do The CMS Energy Insider Transactions Indicate?

An insider hasn't bought CMS Energy stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. On the plus side, CMS Energy makes money, and is growing profits. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We'd practice some caution before buying! 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. At Simply Wall St, we've found that CMS Energy has 2 warning signs (1 can't be ignored!) that deserve your attention before going any further with your analysis.

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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.