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 we’ll take a look at whether insiders have been buying or selling shares in Carrizo Oil & Gas Inc (NASDAQ:CRZO).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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.’
Carrizo Oil & Gas Insider Transactions Over The Last Year
VP & COO J. Fisher made the biggest insider sale in the last 12 months. That single transaction was for US$890k worth of shares at a price of US$26.00 each. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of US$17.48. So it is hard to draw any strong conclusion from it.
In the last twelve months insiders netted US$1.9m for 71.00k shares sold. In total, Carrizo Oil & Gas insiders sold more than they bought over the last year. The average sell price was around US$26.15. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is US$17.48). 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 Carrizo Oil & Gas better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
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. Carrizo Oil & Gas insiders own 6.7% of the company, currently worth about US$108m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Carrizo Oil & Gas Insiders?
The fact that there have been no Carrizo Oil & Gas insider transactions recently certainly doesn’t bother us. Our analysis of Carrizo Oil & Gas insider transactions leaves us unenthusiastic. We also note that, as far as we can see, insider ownership is fairly low, compared to other companies. 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.
But note: Carrizo Oil & Gas may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.