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 shareholders might well want to know whether insiders have been buying or selling shares in Century Aluminum Company (NASDAQ:CENX).
What Is Insider Buying?
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 Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Century Aluminum
Over the last year, we can see that the biggest insider purchase was by Independent Director Jarl Berntzen for US$78k worth of shares, at about US$7.80 per share. So it’s clear an insider wanted to buy, at around the current price. 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. In any event it’s generally a positive if insiders are buying shares at around the current price.
In the last twelve months insiders paid US$117k for 15.00k shares purchased. Overall, Century Aluminum insiders were net buyers last year. The average buy price was around US$7.82. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price (US$8.29). The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Does Century Aluminum Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Our data indicates that Century Aluminum insiders own about US$6.1m worth of shares (which is 0.8% of the company). But they may have an indirect interest through a corporate structure that we haven’t picked up on. We do generally prefer see higher levels of insider ownership.
So What Does This Data Suggest About Century Aluminum Insiders?
The fact that there have been no Century Aluminum insider transactions recently certainly doesn’t bother us. However, our analysis of transactions over the last year is heartening. We’d like to see bigger individual holdings. However, we don’t see anything to make us think Century Aluminum insiders are doubting the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Century Aluminum.
But note: Century Aluminum 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 firstname.lastname@example.org. 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.