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 before you buy or sell Innergex Renewable Energy Inc. (TSE:INE), 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.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. 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 Innergex Renewable Energy
In the last twelve months, the biggest single sale by an insider was when the Senior Vice President of Operations, Peter Grover, sold CA$551k worth of shares at a price of CA$20.26 per share. That means that even when the share price was below the current price of CA$30.07, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 16% of Peter Grover's holding. Peter Grover was the only individual insider to sell shares in the last twelve months.
Over the last year, we can see that insiders have bought 7.13k shares worth CA$114k. On the other hand they divested 27.28k shares, for CA$551k. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, 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 that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Does Innergex Renewable Energy Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Innergex Renewable Energy insiders own about CA$227m worth of shares (which is 4.3% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Do The Innergex Renewable Energy Insider Transactions Indicate?
The fact that there have been no Innergex Renewable Energy insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of Innergex Renewable Energy, we can't say the same about the selling of shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Innergex Renewable Energy. Be aware that Innergex Renewable Energy is showing 2 warning signs in our investment analysis, and 1 of those is a bit unpleasant...
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.
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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