We often see insiders buying up shares in companies that perform well over the long term. 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 AGNC Investment Corp. (NASDAQ:AGNC).
Do Insider Transactions Matter?
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. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
The Last 12 Months Of Insider Transactions At AGNC Investment
Over the last year, we can see that the biggest insider purchase was by CEO, Chief Investment Officer & Director Gary Kain for US$2.4m worth of shares, at about US$12.60 per share. That means that an insider was happy to buy shares at around the current price of US$14.03. 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. 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. Happily, the AGNC Investment insiders decided to buy shares at close to current prices.
Happily, we note that in the last year insiders paid US$2.7m for 212.17k shares. On the other hand they divested 6.74k shares, for US$89k. In the last twelve months there was more buying than selling by AGNC Investment insiders. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
AGNC Investment is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at AGNC Investment Have Sold Stock Recently
We have seen a bit of insider selling at AGNC Investment, over the last three months. Independent Director Morris Davis sold just US$39k worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the amount sold isn't enough for us to put any weight on it.
Insider Ownership of AGNC Investment
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. AGNC Investment insiders own about US$49m worth of shares. That equates to 0.6% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About AGNC Investment Insiders?
Our data shows a little more insider selling, but no insider buying, in the last three months. But the sales were small, so we're not concerned. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in AGNC Investment and we see no evidence to suggest they are worried about the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 2 warning signs for AGNC Investment you should be aware of, and 1 of them is a bit concerning.
But note: AGNC Investment 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.
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