Stock Analysis

Selling US$1.3m worth of stock earlier this year was a lucrative decision for Avista Corporation (NYSE:AVA) insiders

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NYSE:AVA
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Last week, Avista Corporation's (NYSE:AVA) stock jumped 3.4%, but insiders who sold US$1.3m worth of stock in over the past year are likely to be in a better position. Selling at an average price of US$44.08, which is higher than the current price, may have been the wisest decision for these insiders as their investment would have been worth less now than when they sold.

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.

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The Last 12 Months Of Insider Transactions At Avista

In the last twelve months, the biggest single sale by an insider was when the Non Executive Chairman, Scott Morris, sold US$400k worth of shares at a price of US$44.50 per share. So what is clear is that an insider saw fit to sell at around the current price of US$41.28. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.

Avista insiders didn't buy any shares over the last year. 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!

insider-trading-volume
NYSE:AVA Insider Trading Volume December 1st 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).

Avista Insiders Are Selling The Stock

Over the last three months, we've seen a bit of insider selling at Avista. VP, Chief Information Officer & Chief Security Officer James Kensok sold just US$17k worth of shares in that time. It's not great to see insider selling, nor the lack of recent buyers. But the selling simply isn't sufficiently substantial to be of much use as a signal.

Does Avista Boast High Insider Ownership?

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. It appears that Avista insiders own 1.0% of the company, worth about US$29m. 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 Avista Insiders?

Our data shows a little more insider selling, but no insider buying, in the last three months. However, the sales are not big enough to concern us at all. We're a little cautious about the insider selling at Avista. But it's good to see that insiders own shares in the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, Avista has 4 warning signs (and 2 which are a bit unpleasant) we think you should know about.

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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