While it’s been a great week for The Progressive Corporation (NYSE:PGR) shareholders after stock gained 4.1%, they should consider it with a grain of salt. The fact that insiders chose to dispose of US$3.7m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.
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.
The Last 12 Months Of Insider Transactions At Progressive
In the last twelve months, the biggest single sale by an insider was when the President of Personal Lines, Patrick Callahan, sold US$2.4m worth of shares at a price of US$126 per share. That means that even when the share price was below the current price of US$131, an insider wanted to cash in some shares. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was 59% of Patrick Callahan's holding.
In the last year Progressive insiders didn't buy any company stock. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders At Progressive Have Sold Stock Recently
Over the last three months, we've seen significant insider selling at Progressive. Specifically, President of Personal Lines Patrick Callahan ditched US$2.4m 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.
Insider Ownership Of Progressive
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. Progressive insiders own 0.3% of the company, currently worth about US$241m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Progressive Tell Us?
An insider hasn't bought Progressive stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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. You'd be interested to know, that we found 2 warning signs for Progressive and we suggest you have a look.
Of course Progressive may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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, but not derivative transactions.
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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.
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