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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 shareholders might well want to know whether insiders have been buying or selling shares in California Water Service Group (NYSE:CWT).
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
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.'
The Last 12 Months Of Insider Transactions At California Water Service Group
In the last twelve months, the biggest single sale by an insider was when Elissa Ouyang sold US$54k worth of shares at a price of US$54.03 per share. That means that even when the share price was slightly below the current price of US$54.67, an insider wanted to cash in some shares. While sellers have a variety of reasons for selling, this isn't particularly great to see. When an insider sells below the current price, it does tend to make us wonder about the current valuation. We note that the biggest single sale was only 21.4% of Elissa Ouyang's holding.
All up, insiders sold more shares in California Water Service Group than they bought, over the last year. They sold for an average price of about US$48.26. We don't gain confidence from insider selling below the recent share price. But we wouldn't put too much weight on the insider selling. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like California Water Service Group better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders at California Water Service Group Have Sold Stock Recently
The last quarter saw substantial insider selling of California Water Service Group shares. In total, insiders dumped US$108k 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.
Does California Water Service Group Boast High Insider Ownership?
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. A high insider ownership often makes company leadership more mindful of shareholder interests. California Water Service Group insiders own about US$29m worth of shares. That equates to 1.1% of the company. 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 Do The California Water Service Group Insider Transactions Indicate?
Insiders haven't bought California Water Service Group stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn't make us feel much more positive. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We'd think twice before buying! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: California Water Service Group 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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.