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Quite a few insiders have dramatically grown their holdings in Independence Contract Drilling, Inc. (NYSE:ICD) over the past 12 months. An insider's optimism about the company's prospects is a positive sign.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Independence Contract Drilling Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when insider William Monroe bought US$2.8m worth of shares at a price of US$7.81 per share. That means that an insider was happy to buy shares at above the current price of US$4.25. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Notably William Monroe was also the biggest seller.
Happily, we note that in the last year insiders paid US$3.0m for 824.59k shares. But they sold 25.69k shares for US$90k. Overall, Independence Contract Drilling insiders were net buyers during the last year. The average buy price was around US$3.66. It is certainly positive to see that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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.
Independence Contract Drilling Insiders Bought Stock Recently
At Independence Contract Drilling,over the last quarter, we have observed quite a lot more insider buying than insider selling. We can see that insider William Monroe paid US$3.0m for shares in the company. But we did see insider William Monroe sell shares worth US$90k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Does Independence Contract Drilling Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Independence Contract Drilling insiders own 17% of the company, worth about US$6.9m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Independence Contract Drilling Tell Us?
The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Independence Contract Drilling shares, given these transactions (along with notable insider ownership of the company). So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Be aware that Independence Contract Drilling is showing 5 warning signs in our investment analysis, and 3 of those make us uncomfortable...
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.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
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