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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 American Water Works Company, Inc. (NYSE:AWK).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
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.’
The Last 12 Months Of Insider Transactions At American Water Works Company
In the last twelve months, the biggest single purchase by an insider was when Non-Executive Chairman Karl Kurz bought US$91k worth of shares at a price of US$91.30 per share. That means that an insider was happy to buy shares at around the current price. Of course they may have changed their mind. But this suggests they are optimistic. We generally consider it a positive if insiders have been buying on market, even if the share price has increased a bit since then.
Happily, we note that in the last year insiders bought 1.10k shares for a total of US$100k. Overall, American Water Works Company insiders were net buyers last year. The average buy price was around US$91.35. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price of US$97.60. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at American Water Works Company Have Bought Stock Recently
Over the last quarter, American Water Works Company insiders have spent a meaningful amount on shares. Overall, 2 insiders shelled out US$100k for shares in the company — and none sold. This makes one think the business has some good points.
Insider Ownership of American Water Works Company
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Insiders own 0.2% of American Water Works Company shares, worth about US$43m. 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 American Water Works Company Insiders?
It’s certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. Insiders likely see value in American Water Works Company shares, given these transactions (along with notable insider ownership of the company). Of course, the future is what matters most. So if you are interested in American Water Works Company, you should check out this free report on analyst forecasts for the company.
Of course American Water Works Company may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.