On May 25, 2023, J Donahue, Chairman, President & CEO of Federated Hermes Inc (FHI, Financial), sold 100,000 shares of the company. This insider sell comes amidst a year where J Donahue has sold a total of 434,008 shares and purchased 0 shares. The recent transaction raises questions about the company's performance and the relationship between insider trading and stock price.
Who is J Donahue?
J Donahue is the Chairman, President, and CEO of Federated Hermes Inc. He has been with the company for many years and has played a significant role in its growth and development. Under his leadership, Federated Hermes Inc has become a leading global investment manager, providing a wide range of investment solutions to clients worldwide.
Federated Hermes Inc's Business Description
Federated Hermes Inc is a global investment management company that offers a diverse range of investment products and services to individuals, institutions, and intermediaries. The company specializes in providing equity, fixed-income, alternative/private markets, and multi-asset strategies. With a strong focus on sustainable investing, Federated Hermes Inc aims to deliver long-term value to its clients while considering environmental, social, and governance (ESG) factors.
Insider Trends
The insider transaction history for Federated Hermes Inc over the past year reveals that there have been 0 insider buys in total. In contrast, there have been 32 insider sells during the same period. This trend may indicate that insiders are less confident in the company's future prospects or are taking advantage of the current market conditions to cash in on their holdings.
Valuation
On the day of J Donahue's recent sell, shares of Federated Hermes Inc were trading at $35.37 apiece, giving the stock a market cap of $3,228.057 million. The price-earnings ratio is 12.74, which is lower than the industry median of 12.84 and lower than the company's historical median price-earnings ratio. This suggests that the stock may be undervalued compared to its peers and its historical valuation.
With a price of $35.37 and a GuruFocus Value of $40.43, Federated Hermes Inc has a price-to-GF-Value ratio of 0.87. This indicates that the stock is modestly undervalued based on its GF Value. The GF Value is an intrinsic value estimate developed by GuruFocus, calculated using the following three factors:
- Historical multiples (price-earnings ratio, price-sales ratio, price-book ratio, and price-to-free cash flow) that the stock has traded at.
- A GuruFocus adjustment factor based on the company's past returns and growth.
- Future estimates of business performance from Morningstar analysts.
Analysis of Insider Buy/Sell and Relationship with Stock Price
The recent insider sell by J Donahue, along with the overall trend of insider sells over the past year, may raise concerns among investors. However, it is essential to consider the stock's current valuation and the company's business performance before drawing any conclusions. With a price-earnings ratio lower than the industry median and a modestly undervalued GF Value, the stock may still present an attractive investment opportunity.
Investors should keep a close eye on insider trading activity and the company's financial performance to make informed decisions. While insider sells can sometimes signal a lack of confidence in the company's future prospects, they can also be motivated by personal financial needs or other factors unrelated to the company's performance. As always, thorough research and analysis are crucial for making well-informed investment decisions.
