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 Nine Energy Service Inc (NYSE:NINE).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
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 Colombia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
The Last 12 Months Of Insider Transactions At Nine Energy Service
Over the last year, we can see that the biggest insider sale was by Executive VP & President of Completion Solutions David Crombie for US$1.8m worth of shares, at about US$29.24 per share. So what is clear is that an insider saw fit to sell at around the current price of US$26.40. While their view may have changed since the sale, this is not a particularly positive fact. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at that price.
Happily, we note that in the last year insiders paid US$771k for 59.63k shares. But insiders sold 96.76k shares worth US$2.9m. Over the last year we saw more insider selling of Nine Energy Service shares, than buying. They sold for an average price of about US$29.52. It’s not particularly great to see insiders were selling shares at below recent prices (around US$26.40). But we wouldn’t put too much weight on the insider selling. 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Nine Energy Service Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at Nine Energy Service. In total, insiders dumped US$2.1m worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership of Nine Energy Service
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Nine Energy Service insiders own about US$159m worth of shares (which is 18% of the company). 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 Do The Nine Energy Service Insider Transactions Indicate?
Insiders sold stock recently, but they haven’t been buying. Zooming out, the longer term picture doesn’t give us much comfort. While insiders do own shares, they don’t own a heap, and they have been selling. We’d think twice before buying! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Nine Energy Service.
But note: Nine Energy Service 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 firstname.lastname@example.org.