We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Patterson-UTI Energy, Inc. (NASDAQ:PTEN).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
The Last 12 Months Of Insider Transactions At Patterson-UTI Energy
In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Chairman Curtis Huff bought US$144k worth of shares at a price of US$2.06 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$3.96. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
Over the last year, we can see that insiders have bought 235.00k shares worth US$495k. But they sold 7.01k shares for US$65k. In the last twelve months there was more buying than selling by Patterson-UTI Energy insiders. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
Patterson-UTI Energy is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Patterson-UTI Energy 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. Insiders own 2.5% of Patterson-UTI Energy shares, worth about US$19m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Patterson-UTI Energy Tell Us?
It doesn't really mean much that no insider has traded Patterson-UTI Energy shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Patterson-UTI Energy and we see no evidence to suggest they are worried about the future. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Our analysis shows 3 warning signs for Patterson-UTI Energy (1 is a bit unpleasant!) and we strongly recommend you look at these before investing.
Of course Patterson-UTI Energy may not be the best stock to buy. So you may wish to see this free collection of high quality 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. 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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