We wouldn't blame PennyMac Financial Services, Inc. (NYSE:PFSI) shareholders if they were a little worried about the fact that Joseph Mazzella, the Independent Director recently netted about US$1.1m selling shares at an average price of US$98.23. However, that sale only accounted for 4.1% of their holding, so arguably it doesn't say much about their conviction.
We've discovered 2 warning signs about PennyMac Financial Services. View them for free.The Last 12 Months Of Insider Transactions At PennyMac Financial Services
In the last twelve months, the biggest single sale by an insider was when the President, Douglas Jones, sold US$2.7m worth of shares at a price of US$92.81 per share. That means that even when the share price was below the current price of US$98.38, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 5.7% of Douglas Jones's holding.
PennyMac Financial Services insiders didn't buy any shares over the last year. 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!
Check out our latest analysis for PennyMac Financial Services
If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.
Insider Ownership
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. PennyMac Financial Services insiders own about US$225m worth of shares (which is 4.5% 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.
What Might The Insider Transactions At PennyMac Financial Services Tell Us?
Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. But since PennyMac Financial Services is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. When we did our research, we found 2 warning signs for PennyMac Financial Services (1 is a bit unpleasant!) that we believe deserve your full attention.
But note: PennyMac Financial Services may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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 of direct interests only, but not derivative transactions or indirect interests.
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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.