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 before you buy or sell Consolidated Water Co. Ltd. (NASDAQ:CWCO), you may well want to know whether insiders have been buying or selling.
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, most countries require that the company discloses such transactions to the market.
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'.
Consolidated Water Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Director, Clarence Flowers, sold US$213k worth of shares at a price of US$14.70 per share. That means that an insider was selling shares at slightly below the current price (US$15.20). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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. We note that the biggest single sale was only 4.6% of Clarence Flowers's holding.
Over the last year, we note insiders sold 31717 shares worth US$436k. Consolidated Water insiders didn't buy any shares over the last year. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Consolidated Water Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at Consolidated Water. Specifically, Clarence Flowers ditched US$213k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership of Consolidated Water
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Insiders own 4.6% of Consolidated Water shares, worth about US$10m. 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 Consolidated Water Insiders?
An insider sold Consolidated Water shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. But it is good to see that Consolidated Water is growing earnings. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We'd think twice before buying! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Consolidated Water.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.
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.