We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Evoqua Water Technologies Corp. (NYSE:AQUA), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Evoqua Water Technologies
In the last twelve months, the biggest single purchase by an insider was when President Ronald Keating bought US$501k worth of shares at a price of US$9.37 per share. We do like to see buying, but this purchase was made at well below the current price of US$15.75. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn’t tell us much about what they think of current prices.
Happily, we note that in the last year insiders bought 98345 shares for a total of US$911k. In the last twelve months Evoqua Water Technologies insiders were buying shares, but not selling. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Insiders own 0.6% of Evoqua Water Technologies shares, worth about US$10m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Evoqua Water Technologies Tell Us?
It doesn’t really mean much that no insider has traded Evoqua Water Technologies shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Overall we don’t see anything to make us think Evoqua Water Technologies insiders are doubting the company, and they do own shares. Of course, the future is what matters most. So if you are interested in Evoqua Water Technologies, you should check out this free report on analyst forecasts for the company.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.