Stock Analysis

Insiders probably made the right decision selling US$12m worth of shares earlier this year as Enerplus Corporation's (TSE:ERF)) stock dips by 8.5%.

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Insiders at Enerplus Corporation (TSE:ERF) sold US$12m worth of stock at an average price of US$22.33 a share over the past year, making the most of their investment. The company's market worth decreased by CA$405m over the past week after the stock price dropped 8.5%, although insiders were able to minimize their losses

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Enerplus

The Last 12 Months Of Insider Transactions At Enerplus

In the last twelve months, the biggest single sale by an insider was when the President, Ian Dundas, sold CA$3.5m worth of shares at a price of CA$22.21 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (CA$20.17). So it may not tell us anything about how insiders feel about the current share price.

Over the last year, we can see that insiders have bought 37.50k shares worth CA$709k. On the other hand they divested 550.42k shares, for CA$12m. In total, Enerplus insiders sold more than they bought over the last year. The sellers received a price of around US$22.33, on average. It is certainly not great to see that insiders have sold shares in the company. But the selling was at much higher prices than the current share price (CA$20.17), so it probably doesn't tell us a lot about the value on offer today. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

TSX:ERF Insider Trading Volume March 14th 2023

I will like Enerplus better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insiders At Enerplus Have Sold Stock Recently

Over the last three months, we've seen notably more insider selling, than insider buying, at Enerplus. In that time, insiders dumped CA$12m worth of shares. Meanwhile Independent Director Jeffrey Sheets bought CA$221k worth. The share price has moved a bit recently, but it's hard to argue that the selling is a positive.

Insider Ownership Of Enerplus

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. It appears that Enerplus insiders own 0.5% of the company, worth about CA$21m. 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 Enerplus Tell Us?

The insider sales have outweighed the insider buying, at Enerplus, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But since Enerplus is profitable and growing, we're not too worried by this. While insiders do own shares, they don't own a heap, and they have been selling. We're in no rush to buy! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 1 warning sign with Enerplus and understanding this should be part of your investment process.

But note: Enerplus 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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