We'd be surprised if First Merchants Corporation (NASDAQ:FRME) shareholders haven't noticed that the Senior VP & Chief Information Officer, Stephan Fluhler, recently sold US$127k worth of stock at US$40.34 per share. That sale was 11% of their holding, so it does make us raise an eyebrow.
First Merchants Insider Transactions Over The Last Year
The insider, Michael Marhenke, made the biggest insider sale in the last 12 months. That single transaction was for US$450k worth of shares at a price of US$50.00 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$40.88. So it may not tell us anything about how insiders feel about the current share price.
All up, insiders sold more shares in First Merchants than they bought, over the last year. 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!
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Insider Ownership of First Merchants
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. First Merchants insiders own about US$32m worth of shares. That equates to 1.4% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About First Merchants Insiders?
Unfortunately, there has been more insider selling of First Merchants stock, than buying, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. On the plus side, First Merchants makes money, and is growing profits. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. Of course, the future is what matters most. So if you are interested in First Merchants, you should check out this free report on analyst forecasts for the company.
Of course First Merchants 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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