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Having purchased US$593k worth of United Insurance Holdings Corp. (NASDAQ:UIHC) stock, the recent 12% pullback is not what insiders may have expected

The recent price drop of 12% in United Insurance Holdings Corp (NASDAQ:UIHC) stock may have disappointed insiders who bought US$593,003 worth of shares at an average price of US$2.03 over the last 12 months. Insiders invest with the hope of seeing their money grow in value over time. However, due to recent losses, their initial investment is now worth only US$103k, which is not what they expected.

Although insider trading is not the most important thing when it comes to long-term investing, we think it makes perfect sense to keep an eye on what insiders are doing.

Look at the opportunities and risks within the US insurance industry.

United Insurance Holdings Insider Transactions Over the Past Year

Independent director Michael Hogan made the biggest insider purchase in the past 12 months. That single transaction was for US$157,000 worth of shares at a price of US$1.57 each. This means that an insider was lucky to buy shares at above the current price of US$0.35. While their views may have changed since the purchase was made, it at least suggests they had confidence in the company’s future. We always take careful note of the price that insiders pay when they buy shares. Generally, it catches our eye when insiders bought shares at higher than current prices, because it indicates that they believed the shares were worth buying, even at a higher price.

United Insurance Holdings insiders may have bought shares over the past year, but they haven’t sold anything. Their average price was about US$2.03. This is nice to see as it implies that insiders can see value around current prices. The chart below shows insider trading (by companies and individuals) over the past year. If you click on the chart, you can see all the individual trades, including the share price, individual and the date!

insider trading volume
NasdaqCM:UIHC Insider Trading Volume 10 November 2022

United Insurance Holdings aren’t the only stock insiders buying. So check this out free list of growing companies with insider purchases.

Does United Insurance Holdings boast high insider ownership?

Looking at the total insider shareholdings in a company can help inform your view of whether they are well aligned with common shareholders. A high inside ownership often makes company leadership more aware of shareholder interests. It is great to see that United Insurance Holdings insiders own 52% of the company, which is worth about US$8.0 million. This type of significant ownership by insiders generally increases the likelihood that the company will be run in the best interests of all shareholders.

What can the insider trading at United Insurance Holdings tell us?

It doesn’t really mean much that no insider traded United Insurance Holdings shares in the last quarter. But insiders have shown more appetite for the stock in the past year. It would be great to see more insider buying, but overall United Insurance Holdings insiders seem to be pretty well aligned (owning a large chunk of the company’s stock) and optimistic about the future. In addition to knowing about insider trading going on, it is beneficial to identify the risks that United Insurance Holdings faces. Case in point: We noticed 3 warning signs for United Insurance Holdings you should be aware of, and 2 of them are a bit concerning.

If you prefer to look at another company — one with potentially superior financials — then don’t miss out free list of interesting companies that have HIGH return on equity 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 disposals, but not derivative transactions.

Valuation is complex, but we help make it simple.

Find out if United Insurance Holdings may be over or undervalued by looking at our comprehensive analysis, which includes fair value estimates, risks and caveats, dividends, insider trading and financial health.

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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 is not a recommendation to buy or sell any stock, and does not take into account your goals or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any listed stocks.

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