Disclosed on November 4, Anwar Saker Nusseibeh, CEO at Federated Hermes FHI, executed a substantial insider sell as per the latest SEC filing.

What Happened: According to a Form 4 filing with the U.S. Securities and Exchange Commission on Monday, Nusseibeh sold 12,152 shares of Federated Hermes. The total transaction value is $484,359.

As of Tuesday morning, Federated Hermes shares are down by 0.0%, currently priced at $40.02.

All You Need to Know About Federated Hermes

Federated Hermes provides asset-management services for institutional and individual investors. The firm had $782.7 billion in managed assets at the end of June 2024, composed of equity (10%), multi-asset (less than 1%), fixed-income (12%), alternative (3%), and money market (75%) funds. The firm’s cash-management operations are expected to generate around 50% of Federated’s revenue this year, compared with 28%, 12%, and 10%, respectively, for the equity, fixed-income, and alternatives/multi-asset operations. The company’s products are distributed via trust banks, wealth managers, and retail broker/dealers (64% of AUM), institutional investors (27%), and international clients (9%).

Understanding the Numbers: Federated Hermes’s Finances

Positive Revenue Trend: Examining Federated Hermes’s financials over 3 months reveals a positive narrative. The company achieved a noteworthy revenue growth rate of 1.44% as of 30 September, 2024, showcasing a substantial increase in top-line earnings. When compared to others in the Financials sector, the company faces challenges, achieving a growth rate lower than the average among peers.

Profitability Metrics:

• Gross Margin: With a high gross margin of 66.7%, the company demonstrates effective cost control and strong profitability relative to its peers.

• Earnings per Share (EPS): Federated Hermes’s EPS is significantly higher than the industry average. The company demonstrates a robust bottom-line performance with a current EPS of 1.06.

Debt Management: The company maintains a balanced debt approach with a debt-to-equity ratio below industry norms, standing at 0.41.

Assessing Valuation Metrics:

• Price to Earnings (P/E) Ratio: The P/E ratio of 12.66 is lower than the industry average, implying a discounted valuation for Federated Hermes’s stock.

• Price to Sales (P/S) Ratio: With a P/S ratio of 2.01 below industry standards, the stock shows potential undervaluation, making it an appealing investment option for those focusing on sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): With an EV/EBITDA ratio lower than industry averages at 7.48, Federated Hermes could be considered undervalued.

Market Capitalization: Indicating a reduced size compared to industry averages, the company’s market capitalization poses unique challenges.

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Why Insider Transactions Are Key in Investment Decisions

Emphasizing the importance of a comprehensive approach, considering insider transactions is valuable, but it’s crucial to evaluate them in conjunction with other investment factors.

Exploring the legal landscape, an “insider” is defined as any officer, director, or beneficial owner holding more than ten percent of a company’s equity securities, as stipulated by Section 12 of the Securities Exchange Act of 1934. This encompasses executives in the c-suite and major hedge funds. These insiders are required to report their transactions through a Form 4 filing, which must be submitted within two business days of the transaction.

Highlighted by a company insider’s new purchase, there’s a positive anticipation for the stock to rise.

But, insider sells may not necessarily indicate a bearish view and can be motivated by various factors.

Unlocking the Meaning of Transaction Codes

When dissecting transactions, the focal point for investors is often those occurring in the open market, meticulously detailed in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C indicates the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of Federated Hermes’s Insider Trades.

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This article was generated by Benzinga’s automated content engine and reviewed by an editor.