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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Chimera Investment Corporation (NYSE:CIM).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
See our latest analysis for Chimera Investment
Chimera Investment Insider Transactions Over The Last Year
The Independent Non-Executive Director Paul Donlin made the biggest insider purchase in the last 12 months. That single transaction was for US$592k worth of shares at a price of US$8.09 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$12.70. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
Chimera Investment insiders may have bought shares in the last year, but they didn't sell any. 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!
Chimera Investment is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of Chimera Investment
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. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 1.9% of Chimera Investment shares, worth about US$56m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Chimera Investment Insiders?
It doesn't really mean much that no insider has traded Chimera Investment shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Chimera Investment and we see no evidence to suggest they are worried about the future. 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. When we did our research, we found 5 warning signs for Chimera Investment (2 are concerning!) that we believe deserve your full attention.