We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Cimarex Energy Co. (NYSE:XEC), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
The Last 12 Months Of Insider Transactions At Cimarex Energy
Independent Director Michael Sullivan made the biggest insider sale in the last 12 months. That single transaction was for US$105k worth of shares at a price of US$70.22 each. That means that an insider was selling shares at below the current price (US$70.52). While their view may have changed since they sold, this isn’t a particularly bullish sign. As a general rule we consider it to be discouraging when insiders are selling below the current price. It is worth noting that this sale was only 7.5% of Michael Sullivan’s holding. The only individual insider seller over the last year was Michael Sullivan.
You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
Cimarex Energy 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.
Are Cimarex Energy Insiders Buying Or Selling?
Over the last three months, we’ve seen a bit of insider buying at Cimarex Energy. Independent Director Lisa Stewart bought US$9.6k worth of shares in that time. It’s good to see the insider buying, as well as the lack of recent sellers. However, in this case the amount invested recently is quite small.
For a common shareholder, it is worth checking how many shares are held by company 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. It’s great to see that Cimarex Energy insiders own 1.8% of the company, worth about US$130m. 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 Cimarex Energy Insider Transactions Indicate?
Our data shows a little more insider buying than selling in the last three months. But overall the difference isn’t worth writing home about. It’s heartening that insiders own plenty of stock, but we’d like to see more insider buying, since the last year of Cimarex Energy insider transactions don’t fill us with confidence. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: Cimarex 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.
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If you spot an error that warrants correction, please contact the editor at email@example.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.