Insiders At Diamondback Energy Sold US$2.3b In Stock, Alluding To Potential Weakness

Over the past year, many Diamondback Energy, Inc. (NASDAQ:FANG) insiders sold a significant stake in the company which may have piqued investors' interest. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, if numerous insiders are selling, shareholders should investigate more.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Diamondback Energy

The Last 12 Months Of Insider Transactions At Diamondback Energy

Over the last year, we can see that the biggest insider sale was by the insider, Lyndal Greth, for US$2.3b worth of shares, at about US$175 per share. So what is clear is that an insider saw fit to sell at around the current price of US$173. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).

Happily, we note that in the last year insiders paid US$1.5m for 8.83k shares. But insiders sold 13.35m shares worth US$2.3b. All up, insiders sold more shares in Diamondback Energy than they bought, over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like Diamondback Energy better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insiders At Diamondback Energy Have Bought Stock Recently

Over the last three months, we've seen significantly more insider buying, than insider selling, at Diamondback Energy. In fact, two insiders bought US$1.5m worth of shares. But we did see insider selling worth US$1.4m. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Does Diamondback Energy Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Diamondback Energy insiders own about US$18b worth of shares (which is 35% of the company). 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 Diamondback Energy Insider Transactions Indicate?

The recent insider purchases are heartening. On the other hand the transaction history, over the last year, isn't so positive. The high levels of insider ownership, and the recent buying by some insiders suggests they are well aligned and optimistic. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Case in point: We've spotted 3 warning signs for Diamondback Energy you should be aware of, and 2 of them can't be ignored.

But note: Diamondback Energy 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.

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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