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 we'll take a look at whether insiders have been buying or selling shares in Bloom Energy Corporation (NYSE:BE).
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 logic dictates you should pay some attention to whether insiders are buying or selling shares. 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'.
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The Last 12 Months Of Insider Transactions At Bloom Energy
In the last twelve months, the biggest single purchase by an insider was when Lead Independent Director L. Doerr bought US$20m worth of shares at a price of US$15.00 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$11.63). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
Over the last year, we can see that insiders have bought 1.7m shares worth US$26m. On the other hand they divested 45000 shares, for US$694k. In total, Bloom Energy insiders bought more than they sold over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Bloom Energy is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Bloom Energy Have Sold Stock Recently
Over the last three months, we've seen notably more insider selling, than insider buying, at Bloom Energy. In total, insiders sold US$694k worth of shares in that time. On the other hand we note Co-Founder K. Sridhar bought US$108k worth of shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the company has been fully valued in recent months.
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Bloom Energy insiders own 3.7% of the company, worth about US$49m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Bloom Energy Insiders?
Unfortunately, there has been more insider selling of Bloom Energy stock, than buying, in the last three months. But we take heart from prior transactions. We like that insiders own a fair amount of the company. So we're happy enough to look past some selling. Of course, the future is what matters most. So if you are interested in Bloom Energy, you should check out this free report on analyst forecasts for the company.
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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.