While Aon plc (NYSE:AON) shareholders have had a good week with the stock up 3.6%, they shouldn't let their guards down. In spite of the relatively cheap prices, insiders made the decision to sell US$2.7m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Aon

The Last 12 Months Of Insider Transactions At Aon

Over the last year, we can see that the biggest insider sale was by the President, Eric Andersen, for US$2.1m worth of shares, at about US$283 per share. That means that an insider was selling shares at slightly below the current price (US$302). 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. 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. We note that the biggest single sale was only 5.7% of Eric Andersen's holding.

Happily, we note that in the last year insiders paid US$1.3m for 4.60k shares. But they sold 9.65k shares for US$2.7m. Over the last year we saw more insider selling of Aon shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insiders At Aon Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Aon. Specifically, insider Byron Spruell bought US$117k worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Aon insiders own 1.1% of the company, worth about US$714m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The Aon Insider Transactions Indicate?

The recent insider purchase is heartening. However, the longer term transactions are not so encouraging. The high levels of insider ownership, and the recent buying by an insider suggests they are well aligned and optimistic. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Aon. Be aware that Aon is showing 3 warning signs in our investment analysis, and 1 of those is concerning...

Of course Aon 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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