We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Entercom Communications Corp. (NYSE:ETM), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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 don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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’.
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Entercom Communications Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Chairman Emeritus Joseph Field for US$6.1m worth of shares, at about US$9.68 per share. That means that even when the share price was higher, an insider wanted to purchase shares. 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. It’s not at all bad to see insiders buy shares at or above current prices.
Happily, we note that in the last year insiders paid US$37m for 4.73m shares. But insiders sold 70.26k shares worth US$542k. In the last twelve months there was more buying than selling by Entercom Communications insiders. They paid about US$7.89 on average. I’d consider this a positive as it suggests insiders see value at around the current price, which is US$7.16. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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.
Entercom Communications Insiders Bought Stock Recently
Over the last quarter, Entercom Communications insiders have spent a meaningful amount on shares. Specifically, Joseph Field bought US$9.4m worth of shares in that time, and we didn’t record any sales whatsoever. This is a positive in our book as it implies some confidence.
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Entercom Communications insiders own about US$150m worth of shares (which is 15% of the company). 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 is good to see recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. When combined with notable insider ownership, these factors suggest Entercom Communications insiders are well aligned, and quite possibly think the share price is too low. Looks promising! 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.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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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 firstname.lastname@example.org.