We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in Independence Realty Trust, Inc. (NYSE:IRT).
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. 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 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 Independence Realty Trust
The Chairman & CEO Scott Schaeffer made the biggest insider purchase in the last 12 months. That single transaction was for US$235k worth of shares at a price of US$9.39 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$13.51. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
In the last twelve months insiders purchased 28.70k shares for US$269k. But insiders sold 21.35k shares worth US$206k. In total, Independence Realty Trust insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Independence Realty Trust is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Independence Realty Trust Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Independence Realty Trust insiders own 0.9% of the company, worth about US$11m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Independence Realty Trust Insiders?
It doesn't really mean much that no insider has traded Independence Realty Trust shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Overall we don't see anything to make us think Independence Realty Trust insiders are doubting the company, and they do own shares. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For instance, we've identified 5 warning signs for Independence Realty Trust (1 is potentially serious) you should be aware of.
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.
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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