We wouldn't blame Morningstar, Inc. (NASDAQ:MORN) shareholders if they were a little worried about the fact that Joseph Mansueto, the Founder & Executive Chairman of the Board recently netted about US$2.5m selling shares at an average price of US$170. However, that sale only accounted for 0.1% of their holding, so arguably it doesn't say much about their conviction.

Morningstar Insider Transactions Over The Last Year

In fact, the recent sale by Joseph Mansueto was the biggest sale of Morningstar shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was slightly below the current price of US$177, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 0.1% of Joseph Mansueto's holding.

Over the last year we saw more insider selling of Morningstar shares, than buying. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Insider Ownership

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. Morningstar insiders own about US$3.3b worth of shares (which is 49% of the company). 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 Does This Data Suggest About Morningstar Insiders?

Unfortunately, there has been more insider selling of Morningstar stock, than buying, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But it is good to see that Morningstar is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 2 warning signs with Morningstar and understanding these should be part of your investment process.

But note: Morningstar 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.

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.