Insiders of Babcock & Wilcox Enterprises Getting Good Value On Their US$985.5k Investment

Babcock & Wilcox Enterprises, Inc. (NYSE:BW) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 49% resulting in a US$171m addition to the company’s market value. Put another way, the original US$985.5k acquisition is now worth US$10.1m.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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The Last 12 Months Of Insider Transactions At Babcock & Wilcox Enterprises

Over the last year, we can see that the biggest insider purchase was by insider Bruce Galloway for US$886k worth of shares, at about US$0.80 per share. Even though the purchase was made at a significantly lower price than the recent price (US$5.15), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

In the last twelve months insiders purchased 1.96m shares for US$985k. But they sold 98.94k shares for US$189k. In total, Babcock & Wilcox Enterprises insiders bought more than they sold over the last year. Their average price was about US$0.50. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. You can see a visual depiction of insider transactions (by companies and individuals) 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!

See our latest analysis for Babcock & Wilcox Enterprises

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Babcock & Wilcox Enterprises Insiders Bought Stock Recently

Over the last quarter, Babcock & Wilcox Enterprises insiders have spent a meaningful amount on shares. Overall, three insiders shelled out US$100k for shares in the company -- and none sold. This could be interpreted as suggesting a positive outlook.

Does Babcock & Wilcox Enterprises Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. It appears that Babcock & Wilcox Enterprises insiders own 10% of the company, worth about US$51m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Babcock & Wilcox Enterprises Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Given that insiders also own a fair bit of Babcock & Wilcox Enterprises we think they are probably pretty confident of a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 4 warning signs for Babcock & Wilcox Enterprises (of which 2 are a bit unpleasant!) you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.