Stock Analysis

Are Insiders Buying Consolidated Water Co. Ltd. (NASDAQ:CWCO) Stock?

NasdaqGS:CWCO
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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Consolidated Water Co. Ltd. (NASDAQ:CWCO).

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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

View our latest analysis for Consolidated Water

The Last 12 Months Of Insider Transactions At Consolidated Water

The Independent Director Richard Finlay made the biggest insider purchase in the last 12 months. That single transaction was for US$100k worth of shares at a price of US$14.97 each. That means that an insider was happy to buy shares at above the current price of US$13.03. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Richard Finlay was the only individual insider to buy during the last year.

Richard Finlay bought a total of 12.16k shares over the year at an average price of US$14.53. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NasdaqGS:CWCO Insider Trading Volume January 8th 2021

Consolidated Water is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Insiders own 5.3% of Consolidated Water shares, worth about US$10m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Consolidated Water Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Consolidated Water shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders own shares in Consolidated Water and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Consolidated Water. Case in point: We've spotted 1 warning sign for Consolidated Water 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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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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