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 before you buy or sell Agree Realty Corporation (NYSE:ADC), 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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
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Agree Realty Insider Transactions Over The Last Year
Independent Director John Rakolta made the biggest insider purchase in the last 12 months. That single transaction was for US$727k worth of shares at a price of US$54.84 each. That means that an insider was happy to buy shares at around the current price. Of course they may have changed their mind. But this suggests they are optimistic. We generally consider it a positive if insiders have been buying on market, even if the share price has increased a bit since then.
Over the last year, we can see that insiders have bought 44.89k shares worth US$2.3m. On the other hand they divested 3.50k shares, for US$203k. Overall, Agree Realty insiders were net buyers last year. They paid about US$50.95 on average. Although they bought at below the recent price of US$60.74 per share, it is good to see that insiders are willing to invest in the company. 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Agree Realty Insiders Are Selling The Stock
We’ve seen more insider selling than insider buying at Agree Realty recently. In total, COO & Executive VP Laith Hermiz sold US$203k worth of shares in that time. On the other hand we note John Rakolta bought US$9.6k worth of shares. Because the selling vastly outweighs the buying, we’d say this is a somewhat bearish sign.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that Agree Realty insiders own 3.6% of the company, worth about US$73m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Agree Realty Insider Transactions Indicate?
The insider sales have outweighed the insider buying, at Agree Realty, in the last three months. On the other hand, the insider transactions over the last year are encouraging. It’s good to see insiders are shareholders. So the recent selling doesn’t worry us too much. 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.
But note: Agree Realty 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.
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 firstname.lastname@example.org.