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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Apple Hospitality REIT, Inc. (NYSE:APLE).
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 in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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'.
Apple Hospitality REIT Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Independent Director Glenn Bunting bought US$110k worth of shares at a price of US$11.03 per share. That means that an insider was happy to buy shares at around the current price of US$12.73. 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. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for Apple Hospitality REIT share holders is that insiders were buying at near the current price.
In the last twelve months Apple Hospitality REIT insiders were buying shares, but not selling. 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!
Apple Hospitality REIT is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Apple Hospitality REIT Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at Apple Hospitality REIT. We can see that Executive Chairman Glade Knight paid US$61k for shares in the company. No-one sold. This makes one think the business has some good points.
Insider Ownership of Apple Hospitality REIT
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Apple Hospitality REIT insiders own 6.7% of the company, worth about US$191m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Apple Hospitality REIT Insider Transactions Indicate?
The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Apple Hospitality REIT. One for the watchlist, at least! 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. To that end, you should learn about the 2 warning signs we've spotted with Apple Hospitality REIT (including 1 which is significant).
Of course Apple Hospitality REIT 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.
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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