Insiders who sold Euroseas Ltd.'s (NASDAQ:ESEA) earlier this year didn't have to weather this week's 14% slide

By
Simply Wall St
Published
January 25, 2022
NasdaqCM:ESEA
Source: Shutterstock

Even though Euroseas Ltd. (NASDAQ:ESEA) has fallen by 14% over the past week , insiders who sold US$10m worth of stock over the past year have had less luck. Insiders would probably have been better off holding on to their shares given that the average selling price of US$25.02 is still lower than the current share price.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Euroseas

The Last 12 Months Of Insider Transactions At Euroseas

In the last twelve months, the biggest single sale by an insider was when the Director, Andreas Papathomas, sold US$10m worth of shares at a price of US$25.02 per share. That means that an insider was selling shares at slightly below the current price (US$25.84). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was 59% of Andreas Papathomas's holding. Andreas Papathomas was the only individual insider to sell shares in the last twelve months.

The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NasdaqCM:ESEA Insider Trading Volume January 25th 2022

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

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. Euroseas insiders own about US$27m worth of shares. That equates to 14% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Euroseas Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. Still, the insider transactions at Euroseas in the last 12 months are not very heartening. But it's good to see that insiders own shares in the company. 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. In terms of investment risks, we've identified 3 warning signs with Euroseas and understanding them should be part of your investment process.

Of course Euroseas may not be the best stock to buy. So you may wish to see this free collection of high quality 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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