We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Independence Realty Trust, Inc. (NYSE:IRT), 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, such insiders must disclose their trading activities, and not trade on inside information.
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 Independence Realty Trust
Over the last year, we can see that the biggest insider purchase was by Chairman & CEO Scott Schaeffer for US$235k worth of shares, at about US$9.39 per share. So it’s clear an insider wanted to buy, at around the current price, which is US$11.73. That means they have been optimistic about the company in the past, though they may have changed their mind. 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. In this case we’re pleased to report that the insider purchases were made at close to current prices.
Happily, we note that in the last year insiders paid US$269k for 28.70k shares. On the other hand they divested 25.35k shares, for US$259k. In total, Independence Realty Trust insiders bought more than they sold over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Independence Realty Trust Insiders Are Selling The Stock
The last three months saw significant insider selling at Independence Realty Trust. In total, insider Richard Ross dumped US$206k worth of shares in that time, and we didn’t record any purchases whatsoever. In light of this it’s hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership of Independence Realty Trust
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Independence Realty Trust insiders own 0.9% of the company, 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 Independence Realty Trust Tell Us?
An insider sold stock recently, but they haven’t been buying. But we take heart from prior transactions. We like that insiders own a fair amount of the company. So we’re happy enough to look past some selling. So while it’s helpful to know what insiders are doing in terms of buying or selling, it’s also helpful to know the risks that a particular company is facing. To help with this, we’ve discovered 5 warning signs (1 makes us a bit uncomfortable!) that you ought to be aware of before buying any shares in Independence Realty Trust.
Of course Independence Realty Trust may not be the best stock to buy. So you may wish to see this free collection of high quality 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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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. 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.
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