It is not uncommon to see companies perform well in the years after insiders buy shares. 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 ConocoPhillips (NYSE:COP).
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
The Last 12 Months Of Insider Transactions At ConocoPhillips
The insider David Seaton made the biggest insider purchase in the last 12 months. That single transaction was for US$98k worth of shares at a price of US$41.03 each. That implies that an insider found the current price of US$42.69 per share to be enticing. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. Happily, the ConocoPhillips insider decided to buy shares at close to current prices. David Seaton was the only individual insider to buy shares in the last twelve months.
The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
ConocoPhillips is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership of ConocoPhillips
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that ConocoPhillips insiders own 0.09% of the company, worth about US$50m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The ConocoPhillips Insider Transactions Indicate?
It doesn't really mean much that no insider has traded ConocoPhillips shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in ConocoPhillips and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing ConocoPhillips. Be aware that ConocoPhillips is showing 4 warning signs in our investment analysis, and 1 of those is a bit concerning...
But note: ConocoPhillips 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, but not derivative transactions.
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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. 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.
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