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 Air Products and Chemicals, Inc. (NYSE:APD), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
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.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. 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 Air Products and Chemicals
Over the last year, we can see that the biggest insider purchase was by Chairman Seifollah Ghasemi for US$4.5m worth of shares, at about US$227 per share. So it's clear an insider wanted to buy, at around the current price, which is US$234. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. The good news for Air Products and Chemicals share holders is that insiders were buying at near the current price.
Over the last year, we can see that insiders have bought 40200 shares worth US$7.8m. On the other hand they divested 2970 shares, for US$615k. In the last twelve months there was more buying than selling by Air Products and Chemicals insiders. Their average price was about US$193. 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 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 Air Products and Chemicals Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Air Products and Chemicals insiders own about US$134m worth of shares (which is 0.3% of the company). 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 Air Products and Chemicals Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Air Products and Chemicals shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like Air Products and Chemicals insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. Of course, the future is what matters most. So if you are interested in Air Products and Chemicals, 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.
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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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.