Are Insiders Buying Entercom Communications Corp. (NYSE:ETM) Stock?

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 we'll take a look at whether insiders have been buying or selling shares in Entercom Communications Corp. (NYSE:ETM).

Do Insider Transactions Matter?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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'.

View our latest analysis for Entercom Communications

Entercom Communications Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Chairman Emeritus, Joseph Field, sold US$2.6m worth of shares at a price of US$2.57 per share. That means that an insider was selling shares at slightly below the current price (US$4.80). 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. This single sale was just 6.6% of Joseph Field's stake. The only individual insider seller over the last year was Joseph Field. Notably Joseph Field was also the biggest buyer, having purchased US$4.9m worth of shares.

Happily, we note that in the last year insiders paid US$4.9m for 2.82m shares. On the other hand they divested 1.00m shares, for US$2.6m. In the last twelve months there was more buying than selling by Entercom Communications insiders. The average buy price was around US$1.73. It is certainly positive to see that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insider Ownership of Entercom Communications

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Entercom Communications insiders own 17% of the company, currently worth about US$106m 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 Entercom Communications Insiders?

It doesn't really mean much that no insider has traded Entercom Communications shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Judging from their transactions, and high insider ownership, Entercom Communications insiders feel good about the company's future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Entercom Communications. In terms of investment risks, we've identified 1 warning sign with Entercom Communications and understanding it should be part of your investment process.

But note: Entercom Communications 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.

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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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. 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.
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