It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Denbury Resources Inc. (NYSE:DNR), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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 Denbury Resources
President Christian Kendall made the biggest insider purchase in the last 12 months. That single transaction was for US$125k worth of shares at a price of US$1.25 each. That means that even when the share price was higher than US$0.23 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Christian Kendall was the only individual insider to buy shares in the last twelve months.
The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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.
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. Our data suggests Denbury Resources insiders own 1.5% of the company, worth about US$1.7m. I generally like to see higher levels of ownership.
So What Do The Denbury Resources Insider Transactions Indicate?
The fact that there have been no Denbury Resources insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think Denbury Resources insiders are doubting the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Denbury Resources. To that end, you should learn about the 5 warning signs we've spotted with Denbury Resources (including 1 which is a bit unpleasant).
Of course Denbury Resources may not be the best stock to buy. So you may wish to see this free collection of high quality 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.
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.
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