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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 Innovative Industrial Properties, Inc. (NYSE:IIPR).
What Is Insider Buying?
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
Innovative Industrial Properties Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Executive Chairman Alan Gold for US$2.7m worth of shares, at about US$40.00 per share. We do like to see buying, but this purchase was made at well below the current price of US$135. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
Happily, we note that in the last year insiders paid US$2.8m for 70000 shares. But they sold 5181 for US$464k. Overall, Innovative Industrial Properties insiders were net buyers last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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.
Innovative Industrial Properties Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Innovative Industrial Properties shares. In total, insiders dumped US$464k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 5.2% of Innovative Industrial Properties shares, worth about US$69m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Innovative Industrial Properties Insider Transactions Indicate?
Insiders sold Innovative Industrial Properties shares recently, but they didn't buy any. On the other hand, the insider transactions over the last year are encouraging. And insiders do own shares. So the recent selling doesn't worry us too much. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Innovative Industrial Properties.
But note: Innovative Industrial Properties 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.
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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. Thank you for reading.