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 Basic Energy Services, Inc. (NYSE:BAS).
What Is Insider Selling?
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, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
Basic Energy Services Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Director Timothy Day for US$207k worth of shares, at about US$6.98 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$2.09). Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
In the last twelve months insiders purchased 159k shares for US$562k. On the other hand they divested 15711 shares, for US$74k. In total, Basic Energy Services insiders bought more than they sold over the last year. Their average price was about US$3.54. I'd consider this a positive as it suggests insiders see value at around the current price. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Does Basic Energy Services Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. From our data, it seems that Basic Energy Services insiders own 5.8% of the company, worth about US$3.0m. Whilst better than nothing, we're not overly impressed by these holdings.
So What Does This Data Suggest About Basic Energy Services Insiders?
There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think Basic Energy Services insiders are doubting the company. Of course, the future is what matters most. So if you are interested in Basic Energy Services, 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.
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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