Selling FMC Shares at a Lower Price Than Current Market Value May Have Been a Costly Mistake for Insiders

Despite the fact that FMC Corporation’s (NYSE:FMC) value has dropped 14% in the last week insiders who sold US$1.1m worth of stock in the past 12 months have had less success. Given that the average selling price of US$128 is still lower than the current share price, insiders would probably have been better off keeping their shares.

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.

See our latest analysis for FMC

FMC Insider Transactions Over The Last Year

The Executive VP & CFO, Andrew Sandifer, made the biggest insider sale in the last 12 months. That single transaction was for US$639k worth of shares at a price of US$128 each. We generally don’t like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (US$51.75). So it may not tell us anything about how insiders feel about the current share price.

In the last twelve months insiders purchased 10.96k shares for US$904k. But insiders sold 8.82k shares worth US$1.1m. Over the last year we saw more insider selling of FMC shares, than buying. They sold for an average price of about US$128. It is certainly not great to see that insiders have sold shares in the company. However, we do note that the average sale price was significantly higher than the current share price (which is US$51.75). You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, 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).

FMC Insiders Bought Stock Recently

It’s good to see that FMC insiders have made notable investments in the company’s shares. Specifically, Independent Director Robert Pallash bought US$202k worth of shares in that time, and we didn’t record any sales whatsoever. This makes one think the business has some good points.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company 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. FMC insiders own about US$29m worth of shares. That equates to 0.4% of the company. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At FMC Tell Us?

It’s certainly positive to see the recent insider purchase. On the other hand the transaction history, over the last year, isn’t so positive. We don’t take much heart from transactions by FMC insiders over the last year. But they own a reasonable amount of the company, and there was some buying recently. In short they are likely aligned with shareholders. 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. Every company has risks, and we’ve spotted 4 warning signs for FMC (of which 3 shouldn’t be ignored!) you should know about.

But note: FMC 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.