We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Cabot Oil & Gas Corporation (NYSE:COG), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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.
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 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’.
The Last 12 Months Of Insider Transactions At Cabot Oil & Gas
Lead Director Robert Kelley made the biggest insider purchase in the last 12 months. That single transaction was for US$1.1m worth of shares at a price of US$22.25 each. So it’s clear an insider wanted to buy, at around the current price. 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. We generally consider it a positive if insiders have been buying on market, even if the share price has increased a bit since then.
In the last twelve months insiders paid US$1.1m for 50.05k shares purchased. In total, Cabot Oil & Gas insiders bought more than they sold over the last year. The average buy price was around US$22.25. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price (US$25.24). You can see a visual depiction of insider transactions (by individuals) over the last 12 months, 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.
Are Cabot Oil & Gas Insiders Buying Or Selling?
Independent Director Peter Delaney bought just US$1.2k worth of shares in that time. That’s not much at all. Overall, we don’t think these recent trades are particularly informative, one way or the other.
Insider Ownership of Cabot Oil & Gas
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Cabot Oil & Gas insiders own 1.8% of the company, currently worth about US$189m based on the recent share price. 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 Cabot Oil & Gas Insider Transactions Indicate?
Insider purchases have outweighed sales, in the last three months. But overall the difference isn’t worth writing home about. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Cabot Oil & Gas insiders think the business has merit. Of course, the future is what matters most. So if you are interested in Cabot Oil & Gas, you should check out this free report on analyst forecasts for the company.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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.