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 before you buy or sell NewMarket Corporation (NYSE:NEU), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
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.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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’.
NewMarket Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Treasurer Cameron Warner bought US$100k worth of shares at a price of US$378 per share. That implies that an insider found the current (approximate) price enticing. 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. Nonetheless, we consider it positive if insiders want to buy at around the current share price. Cameron Warner was the only individual insider to buy over the year.
You can see a visual depiction of insider transactions over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
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 NewMarket Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. NewMarket insiders own 34% of the company, currently worth about US$1.5b based on the recent share price. 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 Does This Data Suggest About NewMarket Insiders?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like NewMarket insiders are reasonably well aligned (owning significant chunk of the company’s shares) and optimistic for the future. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .
Of course NewMarket may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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 email@example.com.