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 we’ll take a look at whether insiders have been buying or selling shares in Baytex Energy Corp. (TSE:BTE).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a 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 Colombia 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’.
Check out our latest analysis for Baytex Energy
The Last 12 Months Of Insider Transactions At Baytex Energy
Independent Director Mark Bly made the biggest insider purchase in the last 12 months. That single transaction was for CA$405k worth of shares at a price of CA$4.50 each. So it’s clear an insider wanted to buy, even at a higher price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. That purchase may suggest an expectation of positive returns over the long term.
Happily, we note that in the last year insiders paid CA$1.1m for 277.68k shares. On the other hand they divested 350.00k shares, for CA$1.3m. All up, insiders sold more shares in Baytex Energy than they bought, over the last year. The average sell price was around CA$3.57. It is certainly not great to see that insiders have sold shares in the company. But we note that the selling, on average, was at well above the recently traded price of CA$2.45. You can see the insider transactions over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Baytex Energy Have Sold Stock Recently
Over the last three months, we’ve seen notably more insider selling, than insider buying, at Baytex Energy. In total, insiders sold CA$439k worth of shares in that time. On the flip side, insiders spent CA$211k on purchasing shares. The share price has moved a bit recently, but it’s hard to argue that the selling is a positive.
Insider Ownership of Baytex 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Baytex Energy insiders own 3.5% of the company, worth about CA$44m. 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 Baytex Energy Insider Transactions Indicate?
The stark truth for Baytex Energy is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn’t give us much comfort. While insiders do own shares, they don’t own a heap, and they have been selling. We’re in no rush to buy! Of course, the future is what matters most. So if you are interested in Baytex Energy, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.