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 Bluerock Residential Growth REIT, Inc. (NYSEMKT:BRG), 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, such insiders must disclose their trading activities, and not trade on inside information.
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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Bluerock Residential Growth REIT Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Chief Legal Officer & Secretary, Michael Konig, sold US$554k worth of shares at a price of US$7.95 per share. So we know that an insider sold shares at around the present share price of US$7.66. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern. The only individual insider seller over the last year was Michael Konig.
Over the last year, we can see that insiders have bought 5.75k shares worth US$37k. On the other hand they divested 69.71k shares, for US$554k. 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!
I will like Bluerock Residential Growth REIT better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders at Bluerock Residential Growth REIT Have Sold Stock Recently
We've seen more insider selling than insider buying at Bluerock Residential Growth REIT recently. In total, Chief Legal Officer & Secretary Michael Konig sold US$554k worth of shares in that time. On the flip side, Independent Director Romano Tio spent US$5.9k on purchasing shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.
Insider Ownership of Bluerock Residential Growth REIT
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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. From looking at our data, insiders own US$1.6m worth of Bluerock Residential Growth REIT stock, about 0.7% of the company. We consider this fairly low insider ownership.
So What Does This Data Suggest About Bluerock Residential Growth REIT Insiders?
The stark truth for Bluerock Residential Growth REIT is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. When you combine this with the relatively low insider ownership, we are very cautious about the stock. So we'd only buy after very careful consideration. 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 6 warning signs for Bluerock Residential Growth REIT (2 are potentially serious) you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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