Anyone interested in RLI Corp. (NYSE:RLI) should probably be aware that the Independent Director, Michael Stone, recently divested US$140k worth of shares in the company, at an average price of US$102 each. On the bright side, that sale was only 0.6% of their holding, so we doubt it's very meaningful, on its own.
RLI Insider Transactions Over The Last Year
In fact, the recent sale by Independent Director Michael Stone was not their only sale of RLI shares this year. They previously made an even bigger sale of -US$914k worth of shares at a price of US$91.60 per share. That means that an insider was selling shares at slightly below the current price (US$106). 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. 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. This single sale was just 3.8% of Michael Stone's stake.
Over the last year, we can see that insiders have bought 1.40k shares worth US$108k. On the other hand they divested 20.46k shares, for US$1.9m. Michael Stone sold a total of 20.46k shares over the year at an average price of US$91.68. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
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Insider Ownership of RLI
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. A high insider ownership often makes company leadership more mindful of shareholder interests. RLI insiders own about US$198m worth of shares (which is 4.1% 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.
So What Does This Data Suggest About RLI Insiders?
An insider sold stock recently, but they haven't been buying. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, RLI makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. 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. Case in point: We've spotted 2 warning signs for RLI you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.
This article by Simply Wall St is general in nature. 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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