We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Enstar Group Limited (NASDAQ:ESGR), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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 would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
The Last 12 Months Of Insider Transactions At Enstar Group
Co-Founder Dominic Silvester made the biggest insider purchase in the last 12 months. That single transaction was for US$4.7m worth of shares at a price of US$170 each. So it’s clear an insider wanted to buy, at around the current price, which is US$176. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today’s share price, as the discount to value may have narrowed with the rising price. The good news for Enstar Group share holders is that insiders were buying at near the current price.
Over the last year, we can see that insiders have bought 47095 shares worth US$8.0m. On the other hand they divested 200 shares, for US$43k. Overall, Enstar Group insiders were net buyers last year. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Insiders at Enstar Group Have Bought Stock Recently
It’s good to see that Enstar Group insiders have made notable investments in the company’s shares. Director Hans-Peter Gerhardt spent US$1.0m on stock, and there wasn’t any selling. This is a positive in our book as it implies some confidence.
Insider Ownership of Enstar Group
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. It’s great to see that Enstar Group insiders own 4.3% of the company, worth about US$162m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At Enstar Group Tell Us?
The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Enstar Group. Nice! Along with insider transactions, I recommend checking if Enstar Group is growing revenue. This free chart of historic revenue and earnings should make that easy.
But note: Enstar Group 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, 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.