Should You Be Worried About Insider Transactions At PDC Energy, Inc. (NASDAQ:PDCE)?

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We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in PDC Energy, Inc. (NASDAQ:PDCE).

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.’

See our latest analysis for PDC Energy

The Last 12 Months Of Insider Transactions At PDC Energy

The , Daniel Amidon, made the biggest insider sale in the last 12 months. That single transaction was for US$507k worth of shares at a price of US$63.07 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$37.59). So it may not shed much light on insider confidence at current levels.

In the last twelve months insiders purchased 1330 shares for US$54k. But they sold 37200 for US$2.0m. Over the last year we saw more insider selling of PDC Energy shares, than buying. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

NasdaqGS:PDCE Recent Insider Trading, May 13th 2019
NasdaqGS:PDCE Recent Insider Trading, May 13th 2019

I will like PDC Energy better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insiders at PDC Energy Have Sold Stock Recently

There was substantially more insider selling, than buying, of PDC Energy shares over the last three months. In total, insiders sold US$285k worth of shares in that time. On the other hand we note insiders bought US$54k worth of shares, as previously mentioned. Since the selling really does outweigh the buying, we’d say that these transactions may suggest that some insiders feel the shares are not cheap.

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. Insiders own 0.7% of PDC Energy shares, worth about US$16m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About PDC Energy Insiders?

The insider sales have outweighed the insider buying, at PDC Energy, in the last three months. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. Insiders own shares, but we’re still pretty cautious, given the history of sales. We’d think twice before buying! Of course, the future is what matters most. So if you are interested in PDC Energy, you should check out this free report on analyst forecasts for the company.

If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.