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Should You Take Comfort From Insider Transactions At Hersha Hospitality Trust (NYSE:HT)?

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·4 min read
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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 Hersha Hospitality Trust (NYSE:HT).

What Is Insider Buying?

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, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

View our latest analysis for Hersha Hospitality Trust

The Last 12 Months Of Insider Transactions At Hersha Hospitality Trust

In the last twelve months, the biggest single sale by an insider was when the CFO & Assistant Secretary, Ashish Parikh, sold US$714k worth of shares at a price of US$8.24 per share. That means that an insider was selling shares at slightly below the current price (US$8.43). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was 79% of Ashish Parikh's stake. Ashish Parikh was the only individual insider to sell shares in the last twelve months.

Over the last year, we can see that insiders have bought 364.44k shares worth US$3.0m. On the other hand they divested 109.46k shares, for US$898k. In total, Hersha Hospitality Trust insiders bought more than they sold over the last year. The average buy price was around US$8.23. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
insider-trading-volume

Hersha Hospitality Trust is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Hersha Hospitality Trust Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Hersha Hospitality Trust shares. In total, CFO & Assistant Secretary Ashish Parikh dumped US$898k 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 Hersha Hospitality Trust Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It appears that Hersha Hospitality Trust insiders own 5.0% of the company, worth about US$18m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Hersha Hospitality Trust Tell Us?

An insider hasn't bought Hersha Hospitality Trust stock in the last three months, but there was some selling. On the other hand, the insider transactions over the last year are encouraging. And insiders do own shares. So the recent selling doesn't worry us too much. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Hersha Hospitality Trust. Be aware that Hersha Hospitality Trust is showing 4 warning signs in our investment analysis, and 1 of those shouldn't be ignored...

But note: Hersha Hospitality Trust 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.