We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 shareholders might well want to know whether insiders have been buying or selling shares in Aqua America, Inc. (NYSE:WTR).
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, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. 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’.
Aqua America Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Chairman Christopher Franklin bought US$835k worth of shares at a price of US$32.86 per share. That means that an insider was happy to buy shares at around the current price. Of course they may have changed their mind. But this suggests they are optimistic. In any event it’s generally a positive if insiders are buying shares at around the current price.
Happily, we note that in the last year insiders bought 44.64k shares for a total of US$1.5m. In the last twelve months there was more buying than selling by Aqua America insiders. Their average price was about US$32.83. Although they bought at below the recent price of US$35.88 per share, it is good to see that insiders are willing to invest in the company. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Does Aqua America 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. Aqua America insiders own about US$19m worth of shares. That equates to 0.3% 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 Aqua America Insiders?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. But insiders have shown more of an appetite for the stock, over the last year. Overall we don’t see anything to make us think Aqua America insiders are doubting the company, and they do own shares. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: Aqua America 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.
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