Pinnacle West Capital Insiders Sell US$1.9m Of Stock, Possibly Signalling Caution

The fact that multiple Pinnacle West Capital Corporation (NYSE:PNW) 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.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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Pinnacle West Capital Insider Transactions Over The Last Year

The insider, Jacob Tetlow, made the biggest insider sale in the last 12 months. That single transaction was for US$860k worth of shares at a price of US$90.80 each. So we know that an insider sold shares at around the present share price of US$90.42. While insider selling is a negative, to us, it is more negative if the shares are sold 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.

Over the last year we saw more insider selling of Pinnacle West Capital shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Check out our latest analysis for Pinnacle West Capital

I will like Pinnacle West Capital better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Pinnacle West Capital Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Pinnacle West Capital. In total, insider Paul Mountain dumped US$141k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership Of Pinnacle West Capital

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Insiders own 0.3% of Pinnacle West Capital shares, worth about US$32m. 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 Does This Data Suggest About Pinnacle West Capital Insiders?

An insider hasn't bought Pinnacle West Capital stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn't give us much comfort. But since Pinnacle West Capital is profitable and growing, we're not too worried by this. Insiders own shares, but we're still pretty cautious, given the history of sales. We're in no rush to buy! 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. When we did our research, we found 2 warning signs for Pinnacle West Capital (1 is significant!) that we believe deserve your full attention.

But note: Pinnacle West Capital 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.