It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Parsley Energy, Inc. (NYSE:PE).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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’.
Parsley Energy Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Founder & Executive Chairman, Bryan Sheffield, for US$70m worth of shares, at about US$28.15 per share. We generally don’t like to see insider selling, but the lower the sale price, the more it concerns us. It’s of some comfort that this sale was conducted at a price well above the current share price, which is US$17.00. So it is hard to draw any strong conclusion from it.
In the last twelve months insiders purchased 16178 shares for US$332k. But they sold 3.6m for US$94m. In total, Parsley Energy insiders sold more than they bought over the last year. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Insiders at Parsley Energy Have Sold Stock Recently
There was substantially more insider selling, than buying, of Parsley Energy shares over the last three months. In total, Bryan Sheffield sold US$2.0m worth of shares in that time. On the flip side, Independent Director Jerry Windlinger spent US$35k on purchasing shares. Since the selling really does outweigh the buying, we’d say that these transactions may suggest that some insiders feel the company has been fully valued in recent months.
Insider Ownership of Parsley Energy
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It’s great to see that Parsley Energy insiders own 4.1% of the company, worth about US$217m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Parsley Energy Insider Transactions Indicate?
The insider sales have outweighed the insider buying, at Parsley Energy, 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 Parsley Energy is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Parsley Energy.
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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.