It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in Essent Group Ltd (NYSE:ESNT).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Essent Group Insider Transactions Over The Last Year
Andrew Turnbull made the biggest insider sale in the last 12 months. That single transaction was for US$1.2m worth of shares at a price of US$45.62 each. That means that an insider was selling shares at around the current price of US$38.56. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price. Andrew Turnbull was the only individual insider to sell shares in the last twelve months.
Andrew Turnbull divested 35.81k shares over the last 12 months at an average price of US$45.55. The chart below shows insider transactions over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like Essent Group better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It’s great to see that Essent Group insiders own 2.9% of the company, worth about US$109m. 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 Essent Group Insider Transactions Indicate?
The fact that there have been no Essent Group insider transactions recently certainly doesn’t bother us. Our analysis of Essent Group insider transactions leaves us unenthusiastic. And usually insiders own more stock in the company, according to our data. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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 email@example.com.