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In the last year, many Cummins Inc. (NYSE:CMI) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Check out our latest analysis for Cummins
Cummins Insider Transactions Over The Last Year
The Independent Director, Bruno V. Di Leo, made the biggest insider sale in the last 12 months. That single transaction was for US$1.8m worth of shares at a price of US$359 each. That means that an insider was selling shares at around the current price of US$354. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
In the last twelve months insiders purchased 2.59k shares for US$729k. On the other hand they divested 7.41k shares, for US$2.4m. All up, insiders sold more shares in Cummins than they bought, over 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!
For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.
Insiders At Cummins Have Sold Stock Recently
Over the last three months, we've seen significant insider selling at Cummins. Specifically, insiders ditched US$1.8m 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.
Does Cummins Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Cummins insiders own about US$204m worth of shares (which is 0.4% 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.