Insiders At Enphase Energy Sold US$46m In Stock, Alluding To Potential Weakness

The fact that multiple Enphase Energy, Inc. (NASDAQ:ENPH) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Enphase Energy

Enphase Energy Insider Transactions Over The Last Year

The Independent Director, Thurman Rodgers, made the biggest insider sale in the last 12 months. That single transaction was for US$41m worth of shares at a price of US$130 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of US$63.47. So it may not shed much light on insider confidence at current levels.

Happily, we note that in the last year insiders paid US$1.5m for 18.00k shares. But insiders sold 369.71k shares worth US$46m. In total, Enphase Energy insiders sold more than they bought over the last year. The sellers received a price of around US$124, on average. Insider selling doesn't make us excited to buy. But the selling was at much higher prices than the current share price (US$63.47), so it probably doesn't tell us a lot about the value on offer today. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, 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 hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Enphase Energy Insiders Bought Stock Recently

Over the last quarter, Enphase Energy insiders have spent a meaningful amount on shares. President Badrinarayanan Kothandaraman spent US$611k on stock, and there wasn't any selling. That shows some optimism about the company's future.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Enphase Energy insiders own about US$277m worth of shares (which is 3.1% 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.

What Might The Insider Transactions At Enphase Energy Tell Us?

It's certainly positive to see the recent insider purchase. However, the longer term transactions are not so encouraging. The recent buying by an insider , along with high insider ownership, suggest that Enphase Energy insiders are fairly aligned, and optimistic. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Enphase Energy. In terms of investment risks, we've identified 2 warning signs with Enphase Energy and understanding them should be part of your investment process.

But note: Enphase Energy 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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.