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We often see insiders buying up shares in companies that perform well over the long term. 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 Ellington Residential Mortgage REIT (NYSE:EARN).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
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 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’.
The Last 12 Months Of Insider Transactions At Ellington Residential Mortgage REIT
President Laurence Penn made the biggest insider purchase in the last 12 months. That single transaction was for US$163k worth of shares at a price of US$10.88 each. 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 18.04k shares for a total of US$196k. Overall, Ellington Residential Mortgage REIT insiders were net buyers last year. Their average price was about US$10.88. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price (US$11.23). 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!
I will like Ellington Residential Mortgage REIT better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Ellington Residential Mortgage REIT Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. From looking at our data, insiders own US$1.9m worth of Ellington Residential Mortgage REIT stock, about 1.4% of the company. I generally like to see higher levels of ownership.
So What Do The Ellington Residential Mortgage REIT Insider Transactions Indicate?
It doesn’t really mean much that no insider has traded Ellington Residential Mortgage REIT shares in the last quarter. However, our analysis of transactions over the last year is heartening. While we have no worries about the insider transactions, we’d be more comfortable if they owned more Ellington Residential Mortgage REIT stock. Of course, the future is what matters most. So if you are interested in Ellington Residential Mortgage REIT, you should check out this free report on analyst forecasts for the company.
But note: Ellington Residential Mortgage REIT 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.