We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Energous Corporation (NASDAQ:WATT).
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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.’
The Last 12 Months Of Insider Transactions At Energous
In the last twelve months, the biggest single sale by an insider was when President Stephen Rizzone sold US$2.0m worth of shares at a price of US$26.04 per share. While the sale doesn’t make us feel confident, we do note it was conducted at a price well above the current share price, which is US$7.32. So it may not shed much light on insider confidence at current levels.
We note that in the last year insiders divested 198.90k shares for a total of US$4.8m. Over the last year we saw more insider selling of Energous shares, than buying. The sellers received a price of around US$24.29, on average. Insider selling doesn’t make us excited to buy. But the selling was at much higher prices than the current share price (US$7.32), so it probably doesn’t tell us a lot about the value on offer today. You can see a visual depiction of insider transactions over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Does Energous Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. 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 good to see that Energous insiders own 17% of the company, worth about US$32m. This level of insider ownership is good but just short of being particularly stand-out, but it certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Energous Tell Us?
It doesn’t really mean much that no insider has traded Energous shares in the last quarter. We don’t take much encouragement from the transactions by Energous insiders. The modest level of insider ownership is, at least, some comfort. Of course, the future is what matters most. So if you are interested in Energous, you should check out this free report on analyst forecasts for the company.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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 firstname.lastname@example.org.