Insiders' US$3.77m Investments In Red Following Nine Energy Service's US$9.2m Dip In Market Value

The recent 26% drop in Nine Energy Service, Inc.'s (NYSE:NINE) stock could come as a blow to insiders who purchased US$3.77m worth of stock at an average buy price of US$1.43 over the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth US$1.61m, which is not what they expected.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

Nine Energy Service Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider William Monroe for US$1.9m worth of shares, at about US$1.61 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$0.61). Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. William Monroe was the only individual insider to buy during the last year.

William Monroe bought a total of 2.63m shares over the year at an average price of US$1.43. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Check out our latest analysis for Nine Energy Service

Nine Energy Service is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Insiders At Nine Energy Service Have Sold Stock Recently

We have seen a bit of insider selling at Nine Energy Service, over the last three months. Insiders sold just US$21k worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the selling simply isn't sufficiently substantial to be of much use as a signal.

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. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Nine Energy Service insiders own 16% of the company, worth about US$5.0m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Nine Energy Service Tell Us?

Our data shows a little more insider selling, but no insider buying, in the last three months. But given the selling was modest, we're not worried. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Nine Energy Service and their transactions don't cause us concern. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. At Simply Wall St, we've found that Nine Energy Service has 4 warning signs (1 makes us a bit uncomfortable!) that deserve your attention before going any further with your analysis.

Of course Nine Energy Service may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.