Stock Analysis

Are Insiders Selling Cheniere Energy, Inc. (NYSEMKT:LNG) Stock?

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NYSEAM:LNG
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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 before you buy or sell Cheniere Energy, Inc. (NYSEMKT:LNG), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia 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'.

Check out our latest analysis for Cheniere Energy

The Last 12 Months Of Insider Transactions At Cheniere Energy

Over the last year, we can see that the biggest insider sale was by the Independent Director, Nuno Brandolini, for US$1.3m worth of shares, at about US$60.63 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$68.38. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 8.9% of Nuno Brandolini's holding.

Over the last year, we can see that insiders have bought 41.88k shares worth US$1.9m. But insiders sold 32.17k shares worth US$1.9m. Over the last year we saw more insider selling of Cheniere Energy shares, than buying. You can see the insider transactions (by companies and 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!

insider-trading-volume
AMEX:LNG Insider Trading Volume February 26th 2021

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Cheniere Energy Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Cheniere Energy. Specifically, insiders ditched US$1.4m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Does Cheniere Energy Boast High 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's great to see that Cheniere Energy insiders own 0.9% of the company, worth about US$165m. 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 Cheniere Energy Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. Despite some insider buying, the longer term picture doesn't make us feel much more positive. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. While we like knowing 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 found 1 warning sign for Cheniere Energy that deserve your attention before buying any shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.

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What are the risks and opportunities for Cheniere Energy?

Cheniere Energy, Inc., an energy infrastructure company, primarily engages in the liquefied natural gas (LNG) related businesses in the United States.

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Rewards

  • Earnings are forecast to grow 28.66% per year

Risks

  • Negative shareholders equity

  • Significant insider selling over the past 3 months

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