Shareholders Can't Ignore US$5.9m Of Sales By NET Power Insiders

While it’s been a great week for NET Power Inc. (NYSE:NPWR) shareholders after stock gained 12%, they should consider it with a grain of salt. Although prices were relatively low, insiders chose to sell US$5.9m worth of stock in the past 12 months. This could be a sign of impending weakness.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for NET Power

The Last 12 Months Of Insider Transactions At NET Power

The insider, Brandon Heffinger, made the biggest insider sale in the last 12 months. That single transaction was for US$1.8m worth of shares at a price of US$15.39 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (US$9.12). So it is hard to draw any strong conclusion from it.

In the last year NET Power insiders didn't buy any company stock. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart 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).

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. We usually like to see fairly high levels of insider ownership. Our data suggests NET Power insiders own 0.2% of the company, worth about US$4.4m. But they may have an indirect interest through a corporate structure that we haven't picked up on. I generally like to see higher levels of ownership.

So What Do The NET Power Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. The insider transactions at NET Power are not inspiring us to buy. We also note that, as far as we can see, insider ownership is fairly low, compared to other companies. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. While conducting our analysis, we found that NET Power has 2 warning signs and it would be unwise to ignore these.

Of course NET Power may not be the best stock to buy. So you may wish to see this free collection of high quality 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.